Equifax makes money by knowing a lot about you

Equifax knows a lot about you. That is, in essence, how it makes money.

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The company and its competitors have in their files the personal financial information of tens of millions of Americans like you, going back decades. Your mortgage loan totals. When you switched from a Macy's card to a Target card. How much you still owe for college.

"It's a pretty simple business model, actually. They gather as much information about you from lenders, aggregate it, and sell it back to them," said Brett Horn, an industry analyst with Morningstar.

Equifax had more than $3.1 billion in revenue last year, largely from selling data to other companies. Experian's revenue came to $4.34 billion, while TransUnion had $1.7 billion.

The trove of data — Equifax's largest asset — has become its biggest liability after the company admitted that it didn't keep the information safe from criminals who stole or accessed the data on 143 million Americans who are now at risk for identity theft. It's now under investigation at the state and federal level, facing a series of lawsuits, and desperately trying to assuage the anger of the consumers who are its commodities.

What to know about how the credit companies work:

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Equifax, Experian and TransUnion make most of their money selling bulk lists to banks and credit card companies.

American Express, for example, could purchase a list of potential customers 25 to 30 years old with credit scores above 650. Armed with that, AmEx will send out pre-approved credit card mailers, hoping to sign up new customers.

Hundreds of millions of credit reports are sold this way each year to companies like Capital One, JPMorgan Chase and Citigroup. Since the banks buy the reports in bulk, they pay as little as a few dollars per report. While people can get their credit reports once a year for free, Equifax charges $15.95 for the report plus a credit score, while Experian charges $19.95 for a report and score.

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