CREDIT BUREAUS AND CREDIT REPORTS
Psychosis #1: The nature of credit bureaus.
Psychosis #2: Your credit report is reviewed carefully.
Psychosis #3: Including a credit statement is helpful.
Psychosis #4: Negative items must remain for 7 years.
Psychosis #5: Seeking help in repairing credit is unlawful.<?
Psychosis #1: The nature of credit bureaus.
LET'S BEGIN with a startling notion: Most of your creditors don't want you to read this. Why? Probably because the world's most powerful banking interests desperately need consumers to buy into a few oft-told myths which perpetuate their businesses. Not knowing the truth, though, can cost a consumer tens or even hundreds of thousands of dollars during an average lifetime.
Where credit reports are concerned, there are essentially two sets of "truths." On the one hand, there is the fairly meaningless happy patter creditors want you to believe, which you can find repeated in just about every credit-related book and Internet site. And then, of course, there's the real truth which I'll shortly elucidate.
Unfortunately, in order to truly embrace stark reality we must first peruse the prevailing fiction. So we'll examine both here. This article will aim to demolish the various social psychoses perpetuated by your exploitative creditors (and abusive debt collectors, if you happen to be acquainted with those) and transport you to a veritable <?Valhalla of consumer mental health. Even better, maybe you'll end up saving a few bucks too.
So, without further introduction, consider this myth: Credit bureaus are official, perhaps even quasi-governmental agencies, and such vital American institutions work alongside your creditors to keep every adult citizen toeing the financial line.
There's so much wrong with practically every word of this fantasy that it's tough for a consumer advocate to know where to begin. To be sure, there isn't anything much official about the credit bureaus at all. Rather, the major consumer reporting agencies -- Equifax, Experian, and TransUnion -- are simply three large companies operating respectably within the private sector.
In fact, in you were so inclined, you could own a piece of Equifax and Experian yourself just by telephoning your stockbroker. (Forget about buying shares in TransUnion for now, though, as it's still privately owned.)
Sadly, too many creditors want Americans to believe that the credit bureaus enjoy an official, quasi-governmental franchise and will somehow punish consumers who dare to fight back against sloppy reporting, usurious APRs, exploitative late fees, inexplicable surcharges, unethical debt collection practices, and worse. Such creditors want consumers to believe that challenging a credit report item is like questioning a courthouse record. Fortunately, that's just not so.
So contrary to the prevailing perceptual reality, there are no official bureaus. And 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 has no role in producing them. Put bluntly, no law mandates a credit report's existence, and such documents may be considered to be no more than a list of allegations remaining to be proven.
Psychosis #2: Your credit report is reviewed carefully
That used to be true.
Once upon a time in America, if you applied for a credit account anywhere, a bookkeeper in some dusty back room requested a credit report from your local bureau. In fact, in those heady days before the corporate titans took over, all credit bureaus were local. Then every line of your file would be assessed, and if there was a problem, you might be telephoned or called in for more discussion. Lo, you might even be asked for a personal pledge attesting to your responsible intentions. Then a decision would be rendered, usually, but not always, in your favor.
The problem with that business model is that it isn't very scalable. Scouring an individual's credit report takes time, and it also takes skilled (with any luck, that is) human beings to render careful judgments. Unfortunately for fair decision-making, that's just not manageable if you want to extend credit to hundreds of thousands or even millions of people on a national scale. Automation, of course, must save the day, and technology hasn't yet allowed that to include an individualized reading and analysis of everybody's credit reports.
That's where the credit score comes into play. A seemingly wonderful solution, credit scores actually introduce a boatload of other new problems.
So quash Psychosis #2 here and now. Of course creditors want consumers to believe that things haven't changed, that life is as quaint as it was decades ago when customer service meant "personal service," and that they actually pay attention to the report itself rather than treating potential customers as little more than impersonal credit scores. In fact, such mythology begs a mention of the next item on our list of consumer psychopathology:
