It’s a pretty simple trade model, actually. They assume as much data about you from lenders, aggregate it, and sell it back to them,” said Brett Horn, an enterprise analyst with Morningstar.
Equifax had more than $3.1 billion in income last year, largely from selling data to other organizations. Experian’s income came to $4.34 billion, while TransUnion had $1.7 billion.
The trove of data Equifax’s biggest asset has grown to be its biggest liability after the organization admitted that it didn’t keep the data safe from criminals who stole or obtained the data on 143 million Americans who are now at jeopardy for identity theft. It’s now under research at the state and federal level, facing a series of actions, and desperately trying to appease the anger of the customers who are its commodities.
What to understand about how the credit businesses work:
Where the money comes from
Equifax, Experian, and TransUnion make most of their money exchanging bulk lists to banks and credit card companies.
American Express, for example, could obtain a list of potential customers 25 to 30 years old with credit numbers above 650. Armed with that, AmEx will send out pre-certified credit card mailers, hoping to sign up new customers.
Hundreds of millions of credit statements are sold this way each year to organizations like Capital One, JPMorgan Chase, and Citigroup. Since the banks buy the reports in bulk, they pay as little as a few dollars per story. While people can get their credit records once a year for free, Equifax charges $15.95 for the report plus a credit score, while Experian charges $19.95 for a report and score.
The release bureaus also sell credit reports to potential businesses. About 45 percent of organizations with 2,500 to 24,999 employees do education credit checks on some job candidates, according to a 2012 study by the Society for Human Resource Management. While companies cannot get a person’s credit score, they can find legal judgments or bankruptcies.