Credit bureaus, the repositories of debt information that aroused uncommon wrath from consumer advocates over the last decade, are putting all that behind them.
Instead of being preoccupied with recurring flare-ups of bad publicity, the industry's Big Three-Equifax Inc., Experian Inc., and Trans Union Corp.-are reinventing themselves and their images.
TRW Inc., the auto parts, aerospace, and defense conglomerate that had the biggest brand name in the credit bureau business, spun the operation off. It started a new life as Experian.
Equifax shed its health care and insurance businesses, freeing itself to focus on being an information and services provider to the financial services industry.
Trans Union changed the least of the three, but along with the others dove into the predictive modeling business with analytical tools that help lenders select the most appropriate candidates for a given credit offer.
Underlying these changes is a desire to sell more data to more clients- not just in banking-and expand beyond the narrow definition of a credit bureau.
Recent interviews with the chief executive officers of the three leading companies left the impression of an industry at a crossroads. Each of the three are under more pressure than ever to be distinct from one another and to diversify their offerings.
"Our customers increasingly regard credit information as a commodity- like product," said Experian CEO D. Van Skilling. "They say all three bureaus can provide information in roughly the same geographic areas, and therefore there is not a lot of differentiation between them."
Harry Gambill, CEO of Trans Union in Chicago, spoke about the diminishing profitability of the credit reporting business: "We have to find new ways to deploy our technology, resources, and customer access."
Mr. Skilling, Mr. Gambill, and Thomas F. Chapman, who was recently promoted to chief executive officer of Atlanta-based Equifax, take equal umbrage at any characterization of their enterprises as mere credit bureaus.
"A bureau is somewhere you put your socks," Mr. Chapman scoffed.
"We are much more than that," protested Mr. Skilling, who is based in Orange, Calif.
"The credit bureau data is the biggest part of the company," Mr. Chapman said. "But our customers need much more than that core information."
In other words, the three companies' future depends on their developing new core businesses.
As they branch out in such areas as behavioral modeling, marketing, and risk management and begin serving new industries such as telecommunications, they are also running into new competitors.
They compete with and also work with providers of consumer models like Fair, Isaac & Co. and payment processing giants First Data Corp. and Total System Services Inc.
Experian's situation is unusual because the company is owned by Great Universal Stores PLC, a British retailing group that also owns the modeling operation that is second to Fair, Isaac & Co. in the credit scoring business.
Known until recently in the United States as CCN Group of Atlanta, and before that as MDS, the Great Universal Stores subsidiary has since taken the Experian name. One participant in the credit scoring business said that Fair, Isaac must be concerned that Experian-which as the owner of a modeling business is now a direct competitor-plays middle-man for about one-third of its customer base, selling Fair, Isaac reports to banks.
A spokeswoman for Experian said that though it still works with Fair, Isaac, it has come to handle more of its modeling needs in-house.
When the credit bureaus "start to compete on the ancillary services, they are competing not just among themselves but with these unique specialized service companies," said A. Wayne Johnson, an industry consultant who played a behind-the-scenes role in TRW's spinoff of Experian.
Of most competitive concern, though still not entirely clear how, is First Data. Though First Data's focus is credit card processing for banks and retailers, it has recently let some aspirations in the credit information business come to light.
This year First Data acquired CCA Inc., a $5 billion company that serves smaller credit bureaus. In an interview earlier this year, Henry Duques, chairman and CEO of First Data, said it would probably not compete in the conventional credit bureau business because "right now we don't have a way" to match the Big Three's historical data bases.
But the credit bureau executives said First Data is serious about getting in their faces.
"I believe they have a vision to compete with us, so I am watching them very carefully and trying to figure out what they are trying to do," Mr. Gambill said. "They will be formidable."
Calling attention to their dynamism and innovativeness, the credit bureau companies have come a long way from a time, about seven years ago, when they would have preferred to be characterized as "sleepy."
They were taking shots from consumer activists and legislators over the accuracy of consumer credit reports. They were accused of being insensitive to privacy rights and to complaints about errors in credit reports.
They became the focus of congressional investigations. They were even sued by a group of state attorneys general who accused them of illegally selling data to direct marketing companies and of failing to correct errors in consumers' files.
With much of that turbulence behind them, the companies are more likely to be described as growth businesses, even "sexy," according to Mr. Skilling. Mr. Chapman referred to Equifax as "a new 98-year-old company."
Consumerists still keep a wary eye on the bureaus, though some acknowledge they have emerged from the recent storms as better corporate citizens.
Ed Mierzwinski of U.S. Public Interest Research Group, Washington, criticized Experian for rescinding its free credit report offer, which he saw as compensating the public for earlier abuses and encouraging consumers to correct their records.
"After paying big bucks for Experian, apparently Great Universal Stores decided they couldn't afford free reports any more," Mr. Mierzwinski said at a Women in Housing and Finance seminar last month in Washington. "We need government regulation."
Until recently, regulators have largely left the bureaus alone. But renewed scrutiny in Washington has led the three biggest bureaus to adopt voluntary guidelines, aiming to prove they can police themselves.
In an agreement this month with the Federal Trade Commission, the bureaus and nine other information companies said they would limit the availability of certain types of personal information, like Social Security numbers, mothers' maiden names, and credit histories. Consumer activists were pleased.
"There is a general sense that things have improved a lot from where (the bureaus) started," said Gerri E. Detweiler, the former executive director of Bankcard Holders of America, who remains active in consumer education initiatives and sits on Experian's consumer advisory committee.
As the major companies develop new niches, striving to provide what the CEOs like to call "total solutions" for clients, some observers say they should stay focused on improving the veracity of the credit reports.
"They are so hungry to find a new market, a new tool, but when you get down to it, they should focus on ensuring that their core data is as accurate as it could be," Mr. Johnson said.
Nevertheless, the company leaders are cautiously satisfied with their improved images, ever aware that the "Big Brother" accusations can come back to haunt them.
"There is never going to be a pro-privacy organization that is going to say, 'Thank God we have credit bureaus,'" Mr. Gambill said.
But he said lenders would not buy four million credit reports from Trans Union on an average day if the information in the reports were flawed. "We think our data is incredibly accurate," he said.