Consumer credit information has become so valuable that a showdown is looming over lenders' withholding of certain data from credit bureaus.

In a dispute that has caught the attention of bank regulators and the Federal Trade Commission, consumer lenders are admittedly keeping some account information to themselves. They want to prevent competing marketers from identifying attractive prospects and trying to lure them away.

Some do not disclose auto, personal, mortgage, and other loans made in the hotly contested subprime market. Others omit information about customers with high credit lines and balances.

Lenders who do this account for 50% of the credit card market, said David Gibbons, deputy comptroller of the currency. The practice skews the credit scores upon which banks depend to evaluate creditworthiness and could affect consumers' ability to obtain the best possible loan terms.

Failure to share credit records "may not be explicitly illegal," said John D. Hawke Jr., comptroller of the currency, in a speech at a Consumer Bankers Association conference on June 7. "But it can readily be characterized as unfair (and) abusive."

Mr. Hawke said the Office of the Comptroller of the Currency is working with the Federal Trade Commission and other agencies on a joint supervisory response. He said legislative remedies are an option.

The practice began about two years ago in the subprime market. It coincided roughly with the beginning of a massive merger-consolidation wave in banking that intensified competition.

Data withholding has spread in the last several months, regulators say, with a number of large credit card issuers omitting credit line and balance information. Among those doing so are Citigroup Inc., Discover Financial Services Inc., and Household International.

Discover was one of the first card lenders to stop reporting credit-line data. Katherine Edwards, a spokeswoman for the Morgan Stanley Dean Witter & Co. subsidiary, said the company has withheld credit-line information from credit bureaus for two years.

Citigroup stopped reporting credit lines because "we believe (the information) has been used for others to target solicitations to our key customers," said spokeswoman Susan Weeks. "We report everything else necessary for underwriting purposes."

The lenders say competitors are picking off profitable customers by offering better terms based on information obtained from credit reports.

For example, a card issuer could offer a larger credit line to people close to their credit limit with another bank. Or it could offer a card with a lower interest rate to someone whose credit report indicated he had a lot of debt.

The issue is particularly dicey for the major credit bureaus-Trans Union Corp., Experian Inc., and Equifax Inc. They are in the awkward position of disagreeing with their biggest customers.

Experian of Orange, Calif., analyzed its data to determine the impact of missing information. It found that 35% of consumers get lower credit scores when certain facts-the type that lenders are currently withholding-are missing.

"We found that some high-scoring consumers tended to score lower" when data were absent, said Michael Cook, senior vice president of data operations at Experian.

These consumers "may not have received competitive interest rates that they might have received if that data had been present," Mr. Cook said.

The OCC is particularly worried about people with good payment histories that are not reflected in their credit reports. These consumers may therefore qualify only for expensive credit, if they can get any at all.

"The comptroller is concerned that if a subprime borrower is trying to reestablish their credit record through repayment of a loan, and if the borrower's payment performance is not reported, no one would know," said Mr. Gibbons of the OCC.

In response to Mr. Hawke's remarks, some credit card lenders have stopped the practice, Mr. Gibbons said. But the situation is far from resolved.

Credit card lenders are discussing ways to address regulators' concerns, Mr. Gibbons said. But many subprime lenders, trying to reach people with impaired credit histories, do not fall under the purview of bank regulators.

"On the credit card side, I think they are making progress," Mr. Gibbons said. "I don't feel as confident on the subprime side."

Neither credit bureaus nor lender representatives are eager to talk publicly about the issue.

Trans Union and Equifax referred questions to their Washington-based trade group, Associated Credit Bureaus Inc., which in turn referred questions to the American Bankers Association. An ABA spokeswoman declined to comment.

Associated Credit Bureaus has issued a statement supporting "full file reporting of complete and accurate consumer credit histories."

One concern is lenders' ability to identify people who are likely to default on a loan. Credit lines and balances "are extremely valuable in assessing credit risk and in pricing consumers appropriately," said Charles Albright, former vice president of credit policy at Household in Northbrook, Ill.

Mr. Albright had spoken out against the practice of withholding information-though his own company was doing it-in his role as an adviser to the Georgetown University Credit Research Center. He left that post in June, at the same time he retired from Household.

Mr. Albright said it was "a painful decision" for Household to stop reporting its cardholders' credit lines but the company viewed it as a "defensive maneuver" that "leveled the playing field" with competitors.

In general, "high-risk customers pay more and low-risk customers pay less," said Mr. Albright. But the ability to offer appropriate credit terms is compromised by missing data, he said.

Mr. Albright said some lenders stopped reporting these data because they got better at evaluating credit risk and started relying less on the widely used scoring models of Fair, Isaac & Co.

"People thought they were getting really smart and could one-up the industry," Mr. Albright said.

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