Sept. 12, 2012 file photo, a man uses a cellphone as he
passes a T-Mobile store in New York. Credit reporting agency
Experian on Thursday, Oct. 1, 2015 said that hackers
accessed the social security numbers, birthdates and other
personal information belonging to about 15 million T-Mobile
wireless customers. T-Mobile uses Experian to check the
credit of its customers.
NEW YORK — In the latest
high-profile breach of a U.S. organization, hackers broke into
Experian's database of information on 15 million T-Mobile
customers and potential customers. But what is Experian, and why
does the credit bureau keep data on a wireless carrier's
Here's a Q&A about what
happened at Experian and what could happen next.
WHAT INFORMATION DOES EXPERIAN HAVE
If you've applied for a credit
card, mortgage, student loan or any financial product in the last
three decades, Experian likely has some sort of data on you. The
Consumer Financial Protection Bureau estimates Experian, Equifax
and TransUnion hold records on more than 200 million Americans.
The data can be basic information
like your address and birthdate. But if you've applied for credit,
the agencies could know more about your financial situation than
your parents or spouse do. They'll have your Social Security
number, all of the banks you have credit card accounts with, the
limit on those cards and if you pay them down regularly. They can
know your work history, if you've had any collections or court
judgments against you or if you've ever defaulted on a loan.
WHY COLLECT THE INFORMATION?
Banks and other lenders need to
know whether you're a good borrower and pay your debts and would
prefer to gather that information quickly and relatively cheaply.
Credit agencies provide a storehouse of data that lenders can pull
to make credit decisions. In turn, those lenders report their data
back to the agencies so other lenders to have access to more data.
This ongoing database becomes known
as a person's credit report. The data can be further processed
into what's known as a credit score, which is a way of boiling
down years of financial information into a "grade" that
banks can look at to decide whether to lend to you or not.
WHY WAS EXPERIAN COLLECTING AND
HOLDING INFORMATION FOR T-MOBILE?
T-Mobile has to decide whether to
allow a potential customer to open an account or to finance their
newly purchased phone. Anyone applying for cell service, with some
exceptions like a prepaid phone, needs to get a credit check
before T-Mobile or other carriers approve service.
T-Mobile, which contracted out the
credit check to Experian, says applicants from between September
1, 2013 and September 16, 2015 were affected.
WHAT INFORMATION WAS TAKEN? WHAT
SHOULD I DO?
Names, addresses, Social Security
numbers, birthdates and driver's license numbers.
But Experian says the T-Mobile
consumer data and its consumer credit database — the credit
reports noted above — are housed on a separate server and those
records were not exposed in the hack.
T-Mobile said affected consumers
can sign up for two free years of credit monitoring services at
www.protectmyID.com/securityincident, a service owned by Experian.
The offering of an Experian
monitoring service led to protests on Twitter, and T-Mobile may
announce other options for its consumers to protect their data.
CEO Legere said on Twitter that contracting out Experian was the
fastest way to protect customers' data, but they are working on
providing an alternative.
WHO REGULATES THE CREDIT AGENCIES?
The federal regulator of Experian,
TransUnion, Equifax and the other smaller credit agencies is the
Consumer Financial Protection Bureau.
The CFPB, which was created after
the 2008 financial crisis, started regulating credit agencies in
September 2012. It was the first time a federal agency had weighed
in on the industry.
WILL THERE BE ANY CONSEQUENCES FOR
It is too soon to tell. The CFPB,
in a statement, said they "are concerned about the recent
breach of consumer information" and will be monitoring the
situation. Experian could face fines and possible increased
regulatory scrutiny as well if it is found liable for how the
And T-Mobile could stop using
Experian. In a letter to customers, T-Mobile CEO John Legere had
said that he was "incredibly angry" about the breach and
that the company would review its relationship with Experian.