Legal Definitions - consumer reporting agencies (CRA)

A Consumer Reporting Agency (CRA) is a company that collects and maintains information about individuals, then provides this information to third parties. These third parties, such as lenders, landlords, employers, or insurers, use these "consumer reports" to help them make decisions about granting credit, approving rental applications, hiring, or offering insurance policies. CRAs can be broad, compiling extensive financial histories, or specialized, focusing on particular types of data like rental history or medical payment records. Some CRAs also act as resellers, packaging information from other sources into new reports for their clients.

Here are some examples of how Consumer Reporting Agencies operate:

• Applying for a Mortgage: When a person applies for a home loan, the bank will request a credit report. A CRA compiles this report, detailing the applicant's borrowing history, payment patterns, outstanding debts, and any bankruptcies. The bank then uses this comprehensive financial overview to assess the applicant's creditworthiness and decide whether to approve the mortgage.

  This illustrates a CRA providing a broad financial consumer report to a lender to inform a significant lending decision.

• Renting an Apartment: A prospective tenant submits an application for an apartment. The landlord, wanting to ensure the applicant has a good history, requests a tenant screening report. A specialized CRA gathers information such as past rental addresses, eviction records, and any history of property damage or late rent payments. The landlord uses this report to evaluate the applicant's reliability as a tenant.

  This demonstrates a specialized CRA providing specific residential history information to a landlord for a housing decision.

• Undergoing an Employment Background Check: Before hiring a new employee, a company often conducts a background check. They contract with a CRA that specializes in employment screening. This CRA might verify the applicant's educational degrees, previous employment dates and titles, and check for any relevant criminal history. The employer uses this information to make an informed hiring decision.

  This example shows a CRA providing employment-related and public record data to an employer for a hiring decision.