Pre-Training Reading

Welcome to Reading and Understanding Credit Reports!

Disclaimer:  The information in this course is not intended to be legal advice and may not be used as legal advice. Every effort has been made to assure this information is up-to-date. It is not intended to be a full and exhaustive explanation of the law in any area, nor should it be used to replace the advice of your own legal counsel.

Understanding Different Types of Reports

In this lesson, we will explore the different types of credit reports and who uses them. Just as there are many credit scores that are customized for different types of lending purposes, credit reports also come in many different forms, and are customized for their particular use.

Read through the lesson content below to learn how different consumers and businesses use credit reports.

Consumer Disclosure Vs. Business Division Reports

Credit reports can be divided into two categories: Consumer Disclosure Reports and Business Division Reports

As you may suspect from the name, the Consumer Disclosure Report is designed to be viewed by the consumer themselves. The FCRA requires each Consumer Reporting Agency to make a consumer disclosure report available to consumers upon request once per year, or when denied for favorable terms on credit, or denied for credit altogether based on their credit history. Consumers can request their own reports through Equifax, Experian and TransUnion at  www.annualcreditreport.com.

When a business orders a credit report about a consumer in connection with an application for a loan or service, they will receive a Business Division Report. Lenders and other businesses such as landlords, insurance companies, or employers purchase business division credit reports either directly from a credit reporting agency, or from a data re-seller. In order to purchase Business Division Credit reports, a business must have a “permissible purpose” to access consumer credit reports, as outlined in the FCRA. Nonprofits who are purchasing reports for coaching or counseling purposes are likely pulling business division reports.

Financial coaches and counselors, and others working in asset-building programs may need to be familiar with both the Consumer Disclosure Report and the Business Division Report.

Let’s outline some of the differences between these two types of reports:

Understanding the key distinctions between Consumer Disclosure Reports and Business Division Reports is important for financial coaches who may be using either or both types of reports as coaching or counseling tools. In addition, it is generally just good to know that the information consumers see might slightly differ than what the lender or business is able to view.