Wednesday, December 19, 2012

Proposal to Get Credit Reporting Agencies to Provide Timely and Accurate Information

I have noted on this blog instances where Credit Reporting Agencies are sloppy and inept and seem to be incapable of providing the minimum of quality control necessary to protect the consumers they report on.  They have also been shy on the level of customer support that is required to do the job right. I have watched as the Credit Reporting Agencies try to grind the consumer to a halt through endless revisions of erroneous corrections to their credit reports.

Obviously, as a business model, it pays for a Credit Reporting Agency to not invest in customer service because it will take away from their bottom line.  However, if they invest too little, the cost of compliance through fines and litigation will rise.  So, they must strike a balance that works for them.  Clearly, the level that they have arrived at to achieve this balance is tilted against the consumer too much.

Exactly what can we do as consumers to tilt the playing field more in our direction -- a more responsive Credit Reporting Agency?  Obviously, if consumers were more diligent in reporting or acting on violations of the Fair Credit Reporting Act the cost to the Agencies would go up.  Unfortunately, many of the penalties to these agencies don't accrue until some point after they have been notified that something is wrong and then through either the laborious actions of the various government agencies or the courts.  This is not always the case.  For example, the release of credit information to those who are not authorized to receive it, once established could result in fines, or judicial damages.

First principle, you cannot know what is going on with your Consumer Credit File unless you look at it.
The Credit Reporting Agencies are required to provide to you on an annual basis a copy of your credit report for free.  All you have to do is request it.  In most instances you can do this either on line or via the telephone.  You do not necessarily have to write them a letter.  In fact, it is more costly for them if you call.

Second, you must notify the Credit Reporting Agency of any discrepancies in your file, no matter how minor the error is.  I have challenged my reports when a credit balance is off by as little as $1.  This requires the Agency to contact the company that reported the information to verify that the information is correct, or they have to remove the information. Even if the entry is correct, if it is stale (over 7 years old, except for bankruptcy) they must remove the information if you request it.  This, in aggregate, is a very costly process for the Credit Reporting Agencies, especially if you call in your request and use up precious customer service representative time. Of course, you will want a copy of the corrected report to verify that it has been corrected properly.

If the Credit Reporting Agencies are inundated with disputes on the contents of credit files, then they will be forced to expend more money on consumer support activities, or risk the liability of heavy fines and other damages through litigation.

Please comment on this proposal below with any other ideas to help keep Credit Reporting Agencies in check without going through the lengthy complaint to the FTC or litigation methods.

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