To begin, let's set aside any notion you may have that the Credit Bureaus exist to ensure the safe keeping of your personal, private and confidential information. The Credit Bureaus are not official government agencies and they do not create credit profiles in the public interest. They are not in the business of making sure your credit reports are accurate. Or that they do not contain either misleading or unverifiable information. They do not willingly provide you with an Annual Credit Report. It's the law, in the form of the Fair Credit Reporting Act, that requires them to inform you of what’s in their files.
What the Credit Reporting Agencies are is something much different from what many people might believe. Simply said, the Credit Bureaus are multi-billion dollar, for profit corporations who make their money by selling your personal, private and confidential information. They sell it to lenders, creditors, employers, insurance companies, bulk marketers, and even back to you, if you don't know any better. If you subscribe to their services for a report, credit monitoring, credit scores, et al, the information they provide for your hard earned money will not be what any lender you will meet can accept or use.
All three of the Credit Bureaus, Equifax, Experian, and TransUnion, trace their common history to small, local investigative companies. Who created and maintained a repository of information on people living in and around their own communities. These early repositories would collect any seemingly relevant information they could find on a person, mostly from newspaper clippings. Including their employment history, income, marital status, age, race, religion and any other information they could find. They would then provide this information for sale to anyone who wanted it. Who could then use it to help determine whether or not a person was qualified for a loan. And if so, how much interest would be charged and the terms to repay that loan or obligation.
Over time these repositories grew and merged until the credit reporting system moved from one with many small, local agencies into the current national system. As this happened they also became so powerful over the lives of nearly every single adult in America that it became necessary for Congress to step in and regulate them. This legislation resulted in the Fair Credit Reporting Act (FCRA) being passed. In an effort to help protect you from the ever growing power of the information collected and sold by the Credit Reporting Agencies.
With that being said, the FCRA was designed to add both credibility and accountability to the National Credit Reporting System. The Credit Bureaus are no longer able to simply collect whatever they can find and then not disclose to you what is in your own file. As a result of the FCRA, you now have a legal right to a free copy of your credit reports once every 12 months (www.annualcreditreport.com). It also gives you the legal right to dispute and confront the accuracy and integrity of the information in your file. While this does give you legal recourse, Congress is not known for passing legislation that is user friendly for the average, or even above average, American to easliy understand and use.
At the same time, the FCRA does not eliminate many of the current and ongoing problems in the National Credit Reporting System. The Credit Bureaus are still very large autocratic corporations. They are well funded and have a very strong lobby with both the Congress and the Senate. The Federal Trade Commission is charged with oversight of the Credit Reporting Agencies. But the FTC will not act on any one person’s needs, concerns or complaints. At best they will accept your concern or complaint. Then file it away until they have enough of the same or similar issues to take a closer look at as a group. In the mean time, your life continues to go along at the same rate.
You should also know that the Credit Bureaus have developed a full array of tactics to avoid the cost of investigating any disputed information. These tactics can and will range from simple disinformation, to strong-arm tactics of intimidation, to methods of more questionable legality. All three of the Credit Reporting Agencies have been sued, both individually and collectively, by not only the Federal Government but also by Class Action for willful violations of the FCRA since it’s inception in 1972.
Have you ever heard that only time can help with your negative credit rating? That the only way to improve your credit standing is to wait as long as seven to ten years, or more? And that anyone who offers to help you navigate the National Credit System is questionable at best in their motives or effectiveness? It is not surprising that so many people believe many of these statements, when they are not necessarily true. These common misunderstandings are a result of those who simply have a lack of experience and understanding on the subject. Needless to say, the Credit Bureaus are also quick to promote this flawed misperception.
Our hope is that in knowing a little about the history and the motives behind the Credit Bureaus this information will give you a better understanding of the National Credit Reporting System. When you understand something more about the basic nature of the Credit Reporting Agencies, you can start to understand why you now have access to your own credit files, why you have a legal right to address your needs and concerns, and why it can be to your best advantage to have someone’s help and experience in learning even more about the system as a whole.
In conclusion, remember that the Credit Bureaus are invested in only these things. Collecting and selling as much information as they can, for a profit. They are not invested in reducing the amount of information they have to sell. And that they are not, no matter what you may have heard on TV or the radio, in the business of helping people resolve anyone’s individual needs or concerns.
