Four Myths about the Credit Bureaus
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Lexington Law
Providing credit repair services since 1991, Lexington Law has helped over 500,000 clients legally take on their credit. Last year alone, Lexington Law helped clients remove over 600,000 negative items from their credit reports. Visit http://www.lexingtonlaw.com for more information. By Lexington Law
Published on 01/16/2009
They wield enormous power over your life - as well as the lives of every other American adult who cares about their credit. But how much do you actually know about the <a href="http://www.lexingtonlaw.com/g/credit-bureau.html"> credit reporting agencies</a>? Friend or foe? Fact or fiction?
Four Myths about the Credit Bureaus
They exert tremendous power over your life - as well as the lives of every other American adult. But how much do you really know about the credit reporting agencies? Friend or foe? Fact or fiction?
Surveys suggest the typical American knows little about consumer reporting agencies other than that they control consumers' credit reports - and as a result, their buying power. And that's how these credit reporting agencies 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 consumer advocacy law 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 resolve a problem when one shows up on your credit report. And odds are an error will appear. Four out of every five credit reports contain errors, and approximately 25 contain errors serious enough to cause denial of credit, according to research by the National Association of State Public Interest Research Groups.
Here are some common credit bureau misconceptions and the facts behind each fiction:
Fiction 1: There are only three consumer reporting agencies.
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 big three credit bureaus all record 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. Consumer reporting agencies do not share information either, so if there is an problem on your credit reports provided by all three agencies, correcting it with just one of them does not mean it will automatically come off your other two reports at the same time.
Fiction 4: Consumer reporting agencies will act promptly to help me rectify an error or delete inaccurate negative listings from my credit file.
Fact: Federal law requires Equifax, Experian, TransUnion, and all credit bureaus to complete an investigation into a consumer complaint within 30 days. The credit bureau may decide to keep the disputed item on the credit report as is, revise but not delete the information, remove the listing, or deem the complaint frivolous. Given that the easiest option is to simply judge your complaint as frivolous, many consumers find that their legitimate complaints get dismissed.
Increasingly, frustrated and fed up consumers are turning to credit repair professionals like Lexington Law to help them resolve credit reporting problems. Anyone who has disputed a listing on a credit report knows the process can be long, aggravating and perhaps ultimately fruitless. Involving a credit repair professional can achieve faster, better results.
Surveys suggest the typical American knows little about consumer reporting agencies other than that they control consumers' credit reports - and as a result, their buying power. And that's how these credit reporting agencies 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 consumer advocacy law 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 resolve a problem when one shows up on your credit report. And odds are an error will appear. Four out of every five credit reports contain errors, and approximately 25 contain errors serious enough to cause denial of credit, according to research by the National Association of State Public Interest Research Groups.
Here are some common credit bureau misconceptions and the facts behind each fiction:
Fiction 1: There are only three consumer reporting agencies.
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 big three credit bureaus all record 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. Consumer reporting agencies do not share information either, so if there is an problem on your credit reports provided by all three agencies, correcting it with just one of them does not mean it will automatically come off your other two reports at the same time.
Fiction 4: Consumer reporting agencies will act promptly to help me rectify an error or delete inaccurate negative listings from my credit file.
Fact: Federal law requires Equifax, Experian, TransUnion, and all credit bureaus to complete an investigation into a consumer complaint within 30 days. The credit bureau may decide to keep the disputed item on the credit report as is, revise but not delete the information, remove the listing, or deem the complaint frivolous. Given that the easiest option is to simply judge your complaint as frivolous, many consumers find that their legitimate complaints get dismissed.
Increasingly, frustrated and fed up consumers are turning to credit repair professionals like Lexington Law to help them resolve credit reporting problems. Anyone who has disputed a listing on a credit report knows the process can be long, aggravating and perhaps ultimately fruitless. Involving a credit repair professional can achieve faster, better results.