A group of Atlanta entrepreneurs is hoping to capitalize on consumers' growing interest in their credit bureau files, while giving banks a way to score public-relations points.
Qualinet Inc., incorporated 15 months ago, has developed a system that pulls together data from the three major credit reporting companies and prints it out in a customized, easily readable formal.
The product, Credit Image, could be sold directly to individuals, who might find it easier to go to this one source rather than write separately to the appropriate units of Equifax Inc., Trans Union Corp., and TRW Inc.
Alternatively, a bank credit card issuer or other lender might offer Credit Image as a perk or add-on to credit products.
"For just a couple of dollars, a major issuer can give this information at the time the card is issued," said A. Wayne Johnson, Qualinet's adviser and financial backer. "This is something that can have enormous perceived value, while giving the customer help in checking his records."
Credit Image is part of a trend in which various credit industry participants are looking for ways to put individuals' files, or access to those files, to a marketing purpose. Many of these program's originated as antidotes to the complaints about credit-file inaccuracies that led to congressional and regulatory scrutiny in recent years.
TRW, for example, packages its data in a subscription service called Credentials, which it markets directly and through some lending institutions as agents. Numerous banks offer credit-file access, and notification of inquiries into those files, as part of their card marketing.
Consumer Group Wary
Borrowers' recognition of the central importance of credit histories fed their interest in these services, but consumer advocates point out that the bureaus have legal obligations to provide their information at a nominal cost. Some credit reports can be obtained free.
Bankcard Holders of America, the Herndon, Va., advocacy group, objects to the use of credit files for marketing. "Generally, we think the information should not be used without your permission," said Bankcard Holders director Ruth Susswein.
The current spate of offers, including Qualinet's, violates this privacy protection principle, she said, because the offer is made before the individual consents, and because intermediaries may have access to the data, also without express consent.
But for people untroubled by such issues, and willing to pay about $3 more than it would cost to go to the three credit agencies separately, Credit Image is useful, Ms. Susswein said. She found the format not as clear as what TRW provides, but superior to those of Equifax and Trans Union.
Qualinet solicited Ms. Susswein's opinions about the product, and she said she made some formatting suggestions.
Qualinet claims it does not violate privacy or ethical principles any more than a bank does when it gets a credit applicant to sign a form acknowledging that credit reports may be pulled.
The company has set the list pride for a Credit Image report at about $19.50, plus $2.50 for shipping and handling.
In contrast to the traditional, code-laden credit bureau printout, Credit Image includes both a clearly printed tabular summary plus a narrative explanation of each account. The latter includes the credit grantor, type of account, when it was opened, balance, and current status.
Qualinet also provides a toll-free inquiry service and instructs Credit Image recipients on how to correct errors. Eventually, Qualinet might communicate consumer complaints and inquiries through electronic links to the credit bureaus.
"To [Qualinet's] credit, they say they will take full responsibility for complying with the Fair Credit Reporting Act, which is necessary if they get involved in any interpretation of data," said Ms. Susswein.
"Some people, including myself, like the tabular presentation, but others prefer plain English, so we give both," said Robert L. Petersen, president of Qualinet, who spends much of his time on the road trying to drum up business.
The company has three employees - Mr. Petersen and two computer scientists, Michael McGraw and Lee Gantt - and is currently operating out of the Advanced Technology Development Center at Georgia Institute of Technology, which nurtures high-tech start-ups. Mr. Petersen is waiting for revenues to roll in before expanding staff.
The three men and Mr. Johnson, who runs the Qualitech unit of First Data Resources Inc., are equal partners in Qualinet.
"I see this as a true consumer product that can help card issuers enhance value and differentiate their products," Mr. Johnson said recently.
Mr. Petersen calls Mr. Johnson the idea man," while he takes care of sales and his computer colleagues develop and enhance the system.
Mr. Petersen, Mr. McGraw, and Mr. Gantt had a previous success starting and building Dateq, which created a data base for motor-vehicle records. Mr. Johnson planted the Credit Image seed with them about two years ago and they formed the new company.
"I'm out on the road selling quite a lot, which is what I like to do," said Mr. Petersen, 49. He is exploring various distribution channels, including groups of banks and credit unions. He said some banks have expressed an interest in the giveaway idea.
"We pitch this as a value-added product," Mr. Petersen said. "The reaction in the marketplace has been positive.
"Some credit card companies provide yearend summaries to members," he said. Now we're talking about adding complete credit histories from the three major bureaus.
"We are selling both the format we developed, plus the three-bureau completeness. Some bankers are interested in that easy-to-read tabular format, so my guys are programming a software package for them."