Posted on Sunday, 10th January 2010 by admin
They wield enormous power over your life – and the lives of every other American adult. But how much do you really know about the credit reporting agencies?
Surveys suggest the average American knows very little about consumer reporting agencies other than that they control consumer credit profiles – and as a result, their buying power. And that’s how the credit bureaus want it, argues Dr. Randy Padawer, a clinical psychologist whose research into consumer credit has been featured in Smart Money Magazine and the bestselling FICO 850 seminar for The Motley Fool.
“The three major credit bureaus truly want consumers to believe that they’ve each been blessed with an officially sanctioned franchise,” says Padawer, who has consulted for Lexington Law, a firm that helps clients dispute errors and other questionable negative information from their credit reports.
The fewer facts you know about the credit bureaus, the more difficult it will be to fix a problem when one shows up on your credit file. And odds are an error will appear. Four out of every five credit reports contain errors, and one out of every four contains errors serious enough to cause significant problems for consumers, according to research by the U.S. PIRG.
Here are some credit bureau misconceptions and the real facts behind each fiction:
Fiction 1: There are only three “official” credit bureaus.
Fact: Many organizations are in the business of collecting, compiling and processing credit information.
Fiction 2: The big three consumer reporting agencies are officially sanctioned by the federal government.
Fact: “There are no official bureaus,” Padawer says. “While most Americans perceive their credit reports to have at least the same legal standing as their driving records, the truth is that the government had no role in establishing the for-profit companies which produce them.”
Fiction 3: The three major credit bureaus all have the same credit information.
Fact: Different creditors often report to different credit bureaus. In fact, there is no law that forces them to report to any of the big three bureaus at all. Credit bureaus do not share information either, so if you find an error on your credit reports provided by all three agencies, correcting it with one of them does not mean it will come off the other two reports at the same time.
Fiction 4: Credit bureaus will act quickly to help me fix an error or delete inaccurate negative information from my credit file.
Fact: Federal law requires all credit bureaus to complete an investigation into a consumer complaint within 30 days of when it was first made. The bureau may decide to keep the disputed item on the credit report as is, revise but not delete the listing, delete the information, or deem the complaint frivolous. Given that it is easiest to simply judge your complaint as frivolous, many consumers find that their legitimate disputes get dismissed.
Increasingly, frustrated and fed up consumers are turning to credit correction professionals like Lexington Law to help them resolve credit reporting problems. Anyone who has disputed a listing on their credit reports knows the process can be long, maddening and perhaps without results. Involving a credit repair professional can achieve faster, better results.
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Tags: Credit, Credit Bureaus
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