The New York Times has posted an article that discusses how the credit bureau system- whose reports influence everything from your mortgage approval to a potential job offer- actually has two different systems in place: one for the rich people with connections and another for everybody else.
TransUnion, Equifax, and Experian, three of the major credit bureaus, all keep a “V.I.P. list of sorts” that includes judges, celebrities, politicians, and other people who have influence. The people on this list get special help when it comes to fixing problems with their credit reports. The error is usually corrected immediately, and the person will probably never realize they are on a special V.I.P list.
When asked about a V.I.P. list, a representative from TransUnion said that all consumers “have the ability to speak to a live representative.” Equifax said that all consumers who received a copy of their credit report were given a number to contact customer service. Experian denied any such list exists, but a spokeswoman did say that “high risk people,” such as politicians during an election year, will have their credit reports taken offline so that there wouldn’t be any unauthorized access to it. Experian insisted that they didn’t give special treatment to anybody.
Experian is actually the only credit bureau in the US that still processes credit report disputes. All the disputes go through the same online channels unless that dispute involves a V.I.P., according to consumer lawyers.
“They get a lot more high-end treatment,” said Mr. Szwak, the lawyer, who has read the bureaus’ internal procedure manuals and deposed or cross-examined employees. The biggest difference at TransUnion and Equifax, lawyers said, is that V.I.P.’s disputes are specially handled domestically. Regular consumers’ files, meanwhile, may get priority treatment if they involve a time-sensitive issue, like a mortgage pending, or if the consumer is represented by a lawyer or dealing with fraud
For everybody else, complaints about credit report problems are recorded by an automated system and are given to a subcontractor, who is usually outsourced overseas, who spends an average of 2 minutes figuring out the problem and assigning it a computer code and then refers it to the creditor to investigate. Consumer advocates say that usually when the creditor investigates the problem, faulty record keeping is usually to blame.
“The legal responsibility of the credit reporting agencies and of the creditors is well established,” said Leonard Bennett, a consumer lawyer in Newport News, Va. “There is a requirement that they do meaningful research and analysis, and it is almost never done.”
When a consumer’s credit report problem isn’t resolved through the bureau’s investigation, you can find yourself stuck in a rut with no progress being made. It can feel like the only way to progress and remedy the error is to take the case to court. The credit bureaus have grown much more powerful in the past few decades since a good credit score has become crucial in so many aspects of consumers’ lives. The credit bureaus have the power to determine a credit score and federal regulations hasn’t really kept up with this growing power. The Federal Trade commission is supposed to oversee the credit bureaus, but it lacks the “broad authority” to do so.
However, that could change once the Consumer Financial Protection Bureau is given control over the credit bureaus instead of the FTC. The switch would enable the CFPB to create new rules and better examine the bureaus’ policies. Until the switch happens, the bureaus don’t have any economic motivation to change their policies or procedures because their customers are creditors and not consumers.
“There is no neutrality in the credit reporting agencies,” said John Ulzheimer, who has been an expert witness in more than 80 credit-related cases and is president of consumer education at SmartCredit.com. “They work for the lenders who buy credit reports from them, and anyone who suggests otherwise is not being intellectually honest.”
Estimates of credit reports with serious errors vary widely, anywhere from 3 to 25 percent. A recent study, paid for by the Consumer Data Industry Association, the trade group for the bureaus, found potential errors in 19.2 percent of reports, but said that less than 1 percent of them had disputes that, when settled, resulted in a meaningful increase in scores. Even 1 percent translates into millions of consumers, since there are at least 200 million files at each of the bureaus.
New rules went into effect last year to tighten regulations about the accuracy of credit reports. The new rules include allowing consumers to directly dispute errors with the creditor, but some people say the new rule doesn’t have any practicality as consumers don’t have the legal right to sue companies…but they can sue a credit bureau or creditor.
If you have had problems with credit reporting errors and have questions or concerns, feel free to contact us through our website or by calling 205-879-2447.
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