What Is Equifax and Why Does It Have My Financial Information?
Your financial life may be negatively affected by a company that, until recently, you may well have never heard of, or only been dimly aware of.
Earlier this month, Equifax announced that hackers may have gotten access to the personal information of as many as 143 million Americans. If you don't think much about your credit score – after all, plenty of people go years without applying for a home, car or credit card and thinking much about their credit reports – you may be wondering right about now: What is Equifax? How does the hacking affect me? And why does it have my financial information?
Hopefully the following answers will help clear things up.
What is Equifax? The simple explanation is that Equifax is a credit reporting agency and based on the information that they have on consumers, they come up with a credit score. When a consumer applies for a loan, be it a house, car, a credit card, a personal loan from a bank and so on, the lender requests information from companies like Equifax (the other two big credit reporting agencies that lenders routinely go to for credit reports and credit scores are Experian and TransUnion). Equifax will then send over the credit report and credit score to the lender. Based on that credit history the lender can then make a decision to give you a loan, or not give you one, and what your interest rate will be.
It probably should also be noted that it's been reported that Equifax's subsidiary, The Work Number, sells some of its data to debt collectors and financial companies and other organizations. So in short, Equifax is a company that holds a lot of personal information on a lot of people.
How does the hacking affect me? Hopefully, it didn't and won't, but given that personal information from 143 million Americans was put at risk, nobody can feel too good about their odds.
Nolan Taylor, clinical assistant professor of information systems with the Indiana University Kelley School of Business, says there are two primary risks.
"The first is the possibility that the scammer essentially becomes you and is able to obtain new accounts in your name," he says. In other words, a classic case of identity theft. The crook could take out a credit card in your name, buy a bunch of stuff and never pay it back, leaving you on the hook to work it out.
"The second risk is that a scammer may gain sufficient information to attempt to access your current accounts. This second risk is often overlooked and may not be addressed by credit monitoring," Taylor says. "For example, with enough information, it may be possible to file a tax return in your name and collect the tax refund."
Taylor adds that the Federal Trade Commission suggests that you file your taxes early as a preventative measure.
As if filing taxes weren't already fun enough.
Why does Equifax have my financial information? All credit bureaus have it. They collect the financial information that goes on your credit report, and with that information, credit bureaus sell their data to banks, credit unions, insurance firms, retailers, utilities and government agencies – generally any company or organization that is involved in your financial life.
And there's a good reason why they store personal information to your past address and phone numbers, says Curtis Nicholls, associate professor of accounting at Bucknell University in Lewisburg, Pennsylvania.
"This data is often used when applying for new credit to verify the identity of applicants," he says.
Read the end of this article over at U.S News