PsychDoc's Credit Insider Guide to
CREDIT BUREAUS & CREDIT REPORTS
Psychosis #1: The nature of credit bureaus.
LET'S BEGIN with a startling notion: The credit bureaus don't
want you to read this. Why? Probably because those agencies,
along with the much larger banking institutions which depend
upon them, desperately need consumers to buy into a few oft-told
myths which perpetuate their respective businesses.
Unfortunately, though, not knowing the truth can cost a consumer
tens or even hundreds of thousands of dollars during an average
lifetime.
Where credit bureaus are concerned, there are essentially two
sets of "truths." On the one hand, there is the fairly
meaningless happy patter they want you to believe, which you can
find repeated in just about every credit-related book and
Internet site. And then, of course, there's the real truth which
I'll shortly elucidate.
Unfortunately, in order to truly embrace stark reality we
must first peruse the prevailing fiction. So we'll examine both
here. This article will aim to demolish the social psychosis
perpetuated by companies like Equifax, Experian, and TransUnion
and transport you to a veritable Valhalla of consumer mental
health. Even better, maybe you'll end up saving a few bucks too.
Myth: There are three official credit bureaus, and
these beloved and vital American institutions maintain accurate
records regarding the financial lives of every adult citizen.
There's so much wrong with practically every word of this
fantasy that it's tough for a consumer advocate to know where to
begin.
First, the so-called "big three" consumer reporting agencies
with which most Americans are familiar ‹ Equifax, Experian, and
TransUnion ‹ truly want consumers to believe that they've each
been blessed with a sanctioned franchise. Actually, the only
reason such corporate behemoths now dominate the landscape is
because their progenitors simply managed to swallow up each
other as they battled for preeminence through the decades.
Greed, not official dictum,
paved their way. Even if you didn't click the historical
link in the previous sentence just now (and missed out on how,
for example, the company which became Equifax once used Welcome
Wagon ladies to spy for them), suffice to say there is hardly
anything "beloved" about these privacy-busting companies.
Moreover, there are indeed other, newer, credit bureaus on
the horizon (with names like Innovis, Lakeside, and NCTDE) which
hope to eventually eclipse today's major players. In fact,
anybody who so desired could start their own credit reporting
agency, collect personal information about their friends and
neighbors, and then attempt to sell that data to whoever would
be nosy enough to purchase it. Sure, federal law puts limits
upon what can be reported and to whom, but nothing bars any one
of us from entering the field outright regardless.
So contrary to the prevailing perceptual reality, there are
no official bureaus. And 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. Put
bluntly, no law mandates a credit report's existence, and such
documents deserve as much respect as "The Weekly World News"
supermarket tabloid or any other similarly unproven list of
allegations.
And what about the "accurate records" idea? Every
serious study to date has reached the same conclusion:
Credit reports are simply rife with errors.
