What Exactly is a “Fragmented” Credit Report?

By Sarah Seville, Spencer Watson, and Valerie Ploumpis

A fragmented credit report is what happens when your credit history gets split into two different files, i.e. it “fragments” and the credit bureau essentially believes that you are two different people.

When you apply for credit, make a payment on a loan or credit card, or miss a payment, that information gets reported by creditors to one or more credit bureaus—most frequently Equifax, Experian, and Transunion. The bureaus then need to figure out which consumer’s credit file to put that information into. Doing so requires matching the identifying information the creditor provides about the application or account (e.g., your name, social security number, even the gender marker on your loan application) to the identifying information in your credit file.

The info provided by the creditor can either get sorted into an existing file (for a consumer the bureaus already have a file for) or, if they cannot find an existing file, they create a brand-new file to put the information into.  Ideally, they are able to figure out which credit file is yours and include it in your credit report. But, the credit bureaus’ processes to match credit information are, to put it mildly, imperfect.

Credit bureaus make a common error in the matching process when they put information from a different person into another consumer’s credit file. This leads to a “mixed” credit report that includes credit information that is inaccurately included in the report.

A fragmented file happens when the bureaus do not match the information to the correct credit file and instead create an entirely new credit report even though that consumer already has one. For trans and nonbinary folks who have changed their first or full legal name, fragmented files are a frequent issue because two factors used in credit bureaus’ matching algorithms to match a consumer’s information are their first name and gender marker.

There are several different scenarios of the fragmented file problem for consumers after their legal name change: In some cases, two files with credit information now exist and can be accessed, one in the consumer’s legal name and one in their former name, because the bureaus’ matching algorithms sort the credit information into separate files. At times a new file gets created after a consumer applies for credit or updates their identifying information with a creditor, but there is no other credit history in it at all.

At times, the credit file under the consumer’s former name is either difficult to access or cannot be accessed because the consumer has a new legal name. The credit bureaus may flag the credit file as a potential risk for fraud when the consumer contacts them to access the report or dispute information, locking the consumer out of their own credit report.

Often a fragmented credit file also has a major effect on a consumer’s credit score – because, suddenly, their credit report no longer includes any information about the length of their prior account ownership or their positive payment history on accounts in their previous name. Both of those factors are considered by the FICO and VantageScore credit score models, which are the most common credit scores used by lenders.

Errors on credit reports have a wide-ranging effect on consumers’ lives, and fragmented files are no different: Complaints made to the Consumer Financial Protection Bureau and individual consumer stories collected by the NAME Coalition show it can have a wide range of consequences. People applying for loans, cars, housing, and jobs that require a credit check are being unfairly turned down because their credit information is inaccurate, difficult to access, or in a different name than their legal name.  What began as a mere filing error on the part of credit bureaus leads to huge ripple effects which impact people’s lives and financial options.

If you have suffered problems because of a fragmented credit file, we want to hear from you. Sharing your story with the NAME Coalition using the button below will help us advocate for much-needed changes to credit reporting to fix fragmented files for good! Share your story here.