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4 Consumer Reporting Agency Myths
- By Lexington Law
- Published 01/16/2009
- Advice on Money
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Lexington Law
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View all articles by Lexington Law4 Consumer Reporting Agency Myths
They wield enormous power over your life - as well as the lives of every other American adult who cares about their credit. But what do you actually know about the credit reporting agencies? Friend or foe? Fact or fiction?
Numerous surveys suggest that the typical American knows very little about the credit bureaus other than that they essentially control their credit reports - and as a result, their purchasing power. And that is 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 less you know about the credit bureaus, the more difficult it will be to fix 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 U.S. PIRG.
Here are some common credit bureau fictions and the real facts behind each fiction:
Fiction 1: There are only three "official" credit bureaus.
Fact: Many companies are in the business of collecting, compiling and processing credit information.
Fiction 2: The three major credit bureaus are official government entities.
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 reporting agencies. In fact, there is no law that requires them to report to any of the credit bureaus. 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 just one of them does not mean the error will come off your other two credit reports .
Fiction 4: Consumer reporting agencies will act promptly to help me rectify an error or remove inaccurate negative listings from my credit file.
Fact: Federal law requires Equifax, Experian, TransUnion, and all consumer reporting agencies to complete an investigation into a consumer complaint within 30 days. The credit bureau may decide the disputed item remains on the credit report as is, revise but not delete the item, delete the item, or deem the dispute frivolous. Given that it is easiest 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 report problems. Anyone who has disputed an item on a credit reports knows the process can be long, maddening and perhaps without results. Involving a credit repair professional can achieve faster, better results.
Numerous surveys suggest that the typical American knows very little about the credit bureaus other than that they essentially control their credit reports - and as a result, their purchasing power. And that is 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 less you know about the credit bureaus, the more difficult it will be to fix 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 U.S. PIRG.
Here are some common credit bureau fictions and the real facts behind each fiction:
Fiction 1: There are only three "official" credit bureaus.
Fact: Many companies are in the business of collecting, compiling and processing credit information.
Fiction 2: The three major credit bureaus are official government entities.
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 reporting agencies. In fact, there is no law that requires them to report to any of the credit bureaus. 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 just one of them does not mean the error will come off your other two credit reports .
Fiction 4: Consumer reporting agencies will act promptly to help me rectify an error or remove inaccurate negative listings from my credit file.
Fact: Federal law requires Equifax, Experian, TransUnion, and all consumer reporting agencies to complete an investigation into a consumer complaint within 30 days. The credit bureau may decide the disputed item remains on the credit report as is, revise but not delete the item, delete the item, or deem the dispute frivolous. Given that it is easiest 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 report problems. Anyone who has disputed an item on a credit reports knows the process can be long, maddening and perhaps without results. Involving a credit repair professional can achieve faster, better results.