Four Credit Bureau Fictions
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Stuart Hunter
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.
By Stuart Hunter
Published on January 16, 2009
They wield tremendous power over your life - as well as the lives of every other American adult. But what do you really know about the big three credit reporting agencies? 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 bill-paying American adult who cares about their credit. But what do you really know about the big three credit bureaus?
Numerous surveys suggest that the average American knows little about consumer reporting agencies other than that they control their credit reports - and as a result, their purchasing power. And that is exactly 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 whose credit repair services help clients dispute errors and other questionable negative information from their credit reports.
The less you know about the credit reporting agencies, the more difficult it will be to resolve a problem when one shows up on your credit file. And odds are an error will appear. Four out of every five credit reports contain errors, and one out of every four contains errors serious enough to cause significant problems for consumers, according to research by the U.S. PIRG.
Here are some credit bureau misconceptions and the facts behind each fiction:
Fiction 1: There are only three credit bureaus.
Fact: Many organizations 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: Equifax, Experian, and TransUnion 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 at all. Consumer reporting agencies do not share information either, so if there is an problem on your report from all three agencies, repairing it with one of them does not mean it will automatically come off the other two reports .
Fiction 4: Credit bureaus will act quickly to help me fix an error or delete inaccurate negative information 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 to keep the disputed item on the credit report as is, update but not delete the information, remove the item, or deem the complaint frivolous. Given that it is easiest to simply judge your complaint as frivolous, many consumers find that their legitimate disputes 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 ultimately fruitless. Involving a credit repair professional can achieve faster, better results.
Numerous surveys suggest that the average American knows little about consumer reporting agencies other than that they control their credit reports - and as a result, their purchasing power. And that is exactly 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 whose credit repair services help clients dispute errors and other questionable negative information from their credit reports.
The less you know about the credit reporting agencies, the more difficult it will be to resolve a problem when one shows up on your credit file. And odds are an error will appear. Four out of every five credit reports contain errors, and one out of every four contains errors serious enough to cause significant problems for consumers, according to research by the U.S. PIRG.
Here are some credit bureau misconceptions and the facts behind each fiction:
Fiction 1: There are only three credit bureaus.
Fact: Many organizations 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: Equifax, Experian, and TransUnion 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 at all. Consumer reporting agencies do not share information either, so if there is an problem on your report from all three agencies, repairing it with one of them does not mean it will automatically come off the other two reports .
Fiction 4: Credit bureaus will act quickly to help me fix an error or delete inaccurate negative information 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 to keep the disputed item on the credit report as is, update but not delete the information, remove the item, or deem the complaint frivolous. Given that it is easiest to simply judge your complaint as frivolous, many consumers find that their legitimate disputes 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 ultimately fruitless. Involving a credit repair professional can achieve faster, better results.