They exert enormous power over your life - as well as the lives of every other bill-paying American adult who cares about their credit. But how much do you actually know about the credit bureaus?
Numerous surveys suggest the typical American knows little about the credit bureaus other than that they essentially control their credit reports - and as a result, their buying power. And that is how the credit bureaus 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 that helps clients dispute errors and other questionable negative information from their credit reports.
The fewer facts you know about the credit bureaus, the more difficult it will be to fix a problem when one shows up on your credit report. 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 National Association of State Public Interest Research Groups.
Here are some credit bureau misconceptions and the facts behind the fiction:
Fiction 1: There are only three consumer reporting agencies.
Fact: Many companies are in the business of collecting, compiling and processing credit information.
Fiction 2: The big three consumer reporting agencies are officially sanctioned by the federal government.
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: The three major credit bureaus all record 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. Credit bureaus do not share information either, so if there is an error on your report from all three agencies, fixing it with just one of them does not mean the error will automatically come off your other two reports at the same time.
Fiction 4: Consumer reporting agencies will act promptly to help me fix an error or remove inaccurate negative information from my credit report.
Fact: Federal law requires Equifax, Experian, TransUnion, and all consumer reporting agencies to complete an investigation into a consumer complaint within 30 days of when it was first made. The bureau may decide to keep the disputed item on the report as is, revise but not delete the information, remove the listing, or deem the complaint frivolous. Given that the easiest option is to simply deem your complaint as frivolous, many consumers find that their legitimate complaints get dismissed.
Increasingly, frustrated and fed up consumers are turning to credit repair professionals like Lexington Law to help them resolve credit report issues. Anyone who has ever disputed an item on their credit report knows the process can be long, maddening and perhaps without results. Involving a credit repair professional can achieve faster, better results.
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It is possible to legally fix credit. To learn more about disputing the negative information in your credit reports, please visit Lexington Law, the trusted leaders in credit repair.
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