Credit Reporting and Scoring: Part 1

Lenders use credit reports and/or scores to make the decision whether to lend and, if so, at what rates.  Today, prospective landlords, insurance companies, and even employers may make decisions about us based on this information.

Fair or unfair, right or wrong, that’s the way it is for now.

I remember when I first checked my own reports with Equifax, Experian, and TransUnion.  Among all three there were 23 errors!  Though there was nothing on any of them that jumped out to me as derogatory, the one with the most errors issued a score 100 points lower than the one with the fewest.

In February 2013 CBS 60 Minutes ran an eye-opening segment about credit reporting; according to Steve Kroft, “The problem is that it’s not really within the power of the average person using this system to fix the mistakes.  You feel like you’re up against this machine, and there’s no way to break through.”  Ohio Attorney General Mike DeWine alleges criminal conduct by the credit reporting agencies.

Later that year the U.S. Senate held a hearing about industry practices and writer Jennifer Streisand interviewed a few local experts (including yours truly) for a Credit Monitoring Tips article in Lafayette Magazine.

In 2015 the three agencies settled with 31 states and agreed that they would make it easier for consumers to get errors corrected.

Have the agencies finally cleaned up their acts?  Well, maybe you can help me decide.

In January of this year, the Consumer Financial Protection Bureau (CFPB) found that TransUnion and Equifax “deceived consumers about the usefulness of the credit scores they marketed, and lured consumers into expensive recurring payments with false promises.”  The two companies are ordered to pay $17.6 million in restitution to consumers and fines totaling $5.5 million to the CFPB.  

Let’s see, $17.6 million + $5.5 million . . . as near as I can tell that’s less than 1% of a single year’s gross.

Credit reporting agencies never did have the “Plays well with others” box checked off on their report cards.

Will they ever?
60 Minutes links:

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