In recent years, a new class of “big data” brokerages have touted themselves as an alternative to traditional credit reporting and background check agencies.
In lieu of credit activity supplied by lenders — like whether you pay your credit card balances off and if you pay the full amount or just the minimum each month — these companies cobble together a rough outline of an individual’s professional and financial history based on their Internet searches, social media profiles, and mobile app usage.
However, a new report confirms what regulators have long argued about the merits of big data. It rarely, if ever, paints an accurate picture of a consumer’s creditworthiness.
The National Consumer Law Center, an advocacy group for low-income Americans, tested a handful of data-gathering websites that have been known to sell information about consumers to businesses and employers as a means of judging their credit history.