Let’s start with the basics, have you ever applied for a credit card, a mortgage, a personal loan, insurance, or a job? If so, there is probably a company keeping a credit file or credit report reflecting your activities – – this is called a credit file.This file contains in- formation about where you live and work, how you pay your bills, or whether you have been sued, arrested, or have filed for bankruptcy and more. Know that your credit file represents a massive amount of information about you gathered over time; a credit report is a subset of that file.
Who provides this data to the credit bureaus? You, creditors with whom you have a relationship and those to whom you apply for credit, landlords, public record keepers (e.g. courts) and many others – these are called “furnishers” as they furnish or provide information to the credit bureaus.
Companies that gather and sell this information are called “Consumer Reporting Agencies” or “Credit Bureaus.” Such as Experian, Equifax, Transunion and others. They sell your information to potential creditors, employers, insurers, and other businesses.
Think about the scope and types of information you provide to these “furnishers” on applications you have completed over the years – your phone numbers, addresses, email addresses, spouse’s name, mother’s maiden name, income, employment information, etc. and the information your creditors have provided over the years – your name in all of its iterations (maiden name, married name, with or without your middle initial), etc.
Unfortunately, errors in credit reports are all too common. A 2013 study by the Federal Trade Commission found that about 21% of consumers had confirmed errors in their credit reports, 13% had errors that affected their credit scores, and 5% had errors that were serious enough to cause them to be denied credit or pay more for credit. Frankly, it would not surprise me if these stats underrepresent the full scope of the problem and it would be interesting see if/how these stats change when focused on the Black community. These errors may be the sign of a bigger problem called a “mixed file,” which is when the information of two different consumers gets mixed up into one file.
I know a woman whose credit score was in the low 500’s because her ex-husband’s credit file (and his poor payment history) was included in her credit file! Several accounts he applied for even prior to their marriage, negatively impacted her ability to get and maintain attractive interest rates. Thankfully, I knew enough to put her on the path to rectify this error and obtain a settlement from both the furnisher and the credit bureausJ.
The FTC conducted a study between 2002 and 2014 that determined about 40 million people across the United States had at least one error on one of their major credit reports. These errors affected their scores and cost the consumers thousands of dollars in higher interest rates on loans and other fees based on credit history.
Credit bureaus may lean towards retaining incorrect data because they profit from the more data that they have. After all, they are essentially data brokers. So, more data is worth more money, even if some of it is being incorrectly reported. It has also been said that finding incorrect data on your report could be enough to scare you into buying their identity theft monitoring products, which account for over 10% of their revenue. Who are their clients? Mortgage companies, auto lenders, lawyers and “credit repairers” who claim to want to “help” you clean your credit report.
What protections do you have to defend against these practices? The Fair Credit Reporting Act (FCRA) is your hammer! It is the federal law that requires accuracy in consumer credit reports and ensures your private information does not fall into the hands of those without a permissible purpose to have that information. It is an extremely robust law and, like any other tool, works best when you know how to use it. Importantly, when it is violated, you get PAID by the violators. We’ll discuss more in upcoming blogs so please stay tuned.
Your immediate task: Obtain and review your most recent credit report for any errors, including seemingly minor ones such as a misspelled name, incorrect address, creditor name, account numbers, etc. Think of yourself as a sleuth – – you’re looking for any errors you can find. We will help you understand what actions to take, based on these errors, as we continue on this journey together.
PLEASE COMPLETE THIS FORM AND MAIL IN, ACCORDING TO THE INSTRUCTIONS ON THE FORM. THREE REPORTS (EQUIFAX, EXPERIAN AND TRANSUNION) WILL BE MAILED TO YOU, INDIVIDUALLY, WITHIN A FEW WEEKS. DO NOT REQUEST THE REPORT ON-LINE (VIA ANNUALCREDITREPORT.COM, THE CREDIT BUREAUS, CREDIT KARMA, OR OTHER 3RDPARTIES) AS IT WILL RESULT IN A LIMITED REPORT AND MAY IMPACT YOUR ABILITY TO DISPUTE ERRORS LATER AS WELL AS YOUR ABILITY TO OBTAIN A SETTLEMENT CHECK FROM THE FURNISHERS AND/OR CREDIT BUREAUS.
Click here for Free Annual Credit Report Form: https://www.annualcreditreport.com/manualRequestForm.action