A recent spate of news reports on credit report inaccuracies is starting to sound alarms among the public, around Congress, with the justice system, and even with the credit reporting agencies that are coming under more intense scrutiny.
As consumers, we have always been told that it is our ultimate responsibility to check the accuracy of our credit reports, but it appears as if even the most vigilant consumers are running into brick walls when trying to have credit reporting errors fixed.
At present, little has been done to hold the credit bureaus accountable for their reporting inaccuracies or their lack of investigative procedures to correct them. As a result, through no fault of their own, millions of people continue to watch helplessly as their credit standings are reduced to rubble.
Credit Reporting Errors can be Life Changing
It can happen to anyone. On any given day a stranger’s name can pop up on your credit report along with a credit account that’s not yours. Suddenly, you begin to receive phone calls from a collections agency threatening to take you to court over a debt not of your making. Or, your bank notifies you that they are increasing your interest rate and lowering your credit limit because of the collections that have shown up on your credit report.
You scramble to obtain a copy of your credit report and instantly spot the culprit – a name that looks a lot like yours and a strange credit account that looks to be linked to that name. Relieved, you call the bank to let them know of the error, but they can do nothing because they can only go by the information they receive from the credit bureau. No problem. You contact the credit bureau by phone and by letter, and, as they are required to do, they say they will investigate. Then, you wait. And wait.
Finally, a letter arrives from the credit bureau. But instead of indicating that they have fixed what would seem to be a simple case of crossed identities, they inform you that the data has been verified. What?!!! The battle has only begun. It may take several letters to your state attorney before you get any relief.
Understand that the Credit Bureaus are not Your Friend
Most people don’t realize that the credit bureaus exist primarily to serve their clients, which are the banks and businesses that pay them for all of the data they collect on individuals and businesses. While they may profess to also serve the consumer, that’s more of an ancillary objective. Credit bureaus are required by law to ensure that the data is accurate and to fix inaccuracies as they occur.
The problem is that they are not held to any particular standard in how they go about investigating the error or how they determine the veracity of a consumer’s claim. The result is that many consumers are forced into the untenable position of having to prove their innocence. In essence, we are guilty until proven innocent.
Although the problems with credit reporting have suddenly popped up on the lawmakers’ and consumer watchdog agencies’ radars, because of the near complete absence of transparency in their procedures, the credit bureaus continue to act with a large measure of impunity.
While we may see some regulatory action to increase the accountability of the credit bureau, the only protection consumers have at the moment is to take a “caveat emptor” (Buyer Beware) approach to managing their credit. It’s no longer enough to simply monitor your credit reports; a more pre-emptive strategy is required to minimize the chances of reporting errors.
- Check your credit reports at least three times per year. You are entitled to receive a free report annually from each of the credit bureaus. Order one from each at three different times during the year.
- As an added measure, subscribe to a credit monitoring service that will alert you instantly to any changes in your credit report.
- When applying for credit, or when applying for a new job, always use your complete name, including your middle name and any suffixes such as Jr. or Sr.
- Immediately report, in writing, any errors to all three of the credit bureaus. If the error is not corrected, file a complaint immediately with the Federal Trade Commission and your state’s Attorney General.
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