So what's your definition of a Credit Bureau? Many would say it's a Government Agency that is responsible for reporting and maintaining financial information about consumers. EHHHHHHH, WRONG! These companies have absolutely nothing to do with Government operations. However, the word “Bureau” is defined as “a government department or a subdivision of a department”, so one could easily mistake these companies as government officials seeing how the name itself appears to be a bit misleading.
The truth is … Credit Bureaus (also known as “Credit Reporting Agencies”) are nothing more than a private Corporation – no different from other big name corporations like Walmart, JoAnne’s, or Bank of America, for example. Their primary job is to collect, store, maintain, and sell information about your life's financial history. And Yes, they do get paid for it!
The problem with these agencies is that 75-90% of the time, they are selling inaccurate information about the consumers in its database. Although not fully responsible for the inaccurate information, they do not have, nor do they care to adopt, a dependable and sufficient process for taking great care and ensuring that all of its data is 100% accurate. This has lead to these agencies, namely the big 3 – Experian, Equifax, and TransUnion – receiving thousands upon thousands of disputes per day, regarding inaccurate consumer credit reports.
Aside from the misleading name and the horrible reputation for inaccuracies, these agencies have also developed an automated system to process consumer disputes. With the number of disputes they get everyday, I can see why they'd adopt such a system. However, the system is insufficient and unfair to consumers who are honestly trying to right the wrongs on their credit reports. In a nutshell, here's how the dispute process works:
- The mail is received and envelopes opened by a machine
- Dispute Letters are extracted and separated by a machine
- Dispute Letters are placed on a conveyor belt and sent through an OCR machine to be read, interpreted, and processed all by a machine
- The Dispute Letter is compared against hundreds of thousands of other disputes already processed into their system. If the characteristics of the letter is similar to any of the other hundreds of thousands of disputes, then it may be deemed as “frivolous” and the dispute legally ignored.
- If not, then based on the interpretation of the machine, it decides on how to process the dispute
- Ultimately, a real human being never actually needs to intervene. The machine pretty much does it all!
- To top it all off, many of the reporting companies receive these disputes as a batch file. And at the push of one simple little button called “Verify”, these companies can click to verify all accounts sent to them without ever actually having to look at the file.
This, in my Professional opinion, is not only unfair but unjust. Furthermore, Credit Reporting Agencies (CRA's) are rich thanks to consumers and their bad credit. Yep, it's bad credit that keeps their pockets and wallets nice and fat! By maintaining one's bad credit history, the CRA's are able to sell this information to predatory lenders, amongst other nightmare organizations, who are looking to lend at ridiculously high interest rates and fees. The worst the credit, the more they can charge. Therefore, bad credit is EXTREMELY valuable to them. Although they appear to be your friends, they have absolutely “0” Motivation for helping consumers to improve their credit reports.
If that's not enough, here's a pretty interesting fact for you! In 2009, the Better Business Bureau received and processed just under 6500 consumer complaints on Credit Reporting Agencies. That's 5500 more complaints than Credit Repair Agencies received that same year. Wow! It's only that much more shocking then, to see that they are in “Good” standing with the BBB. How hilarious! Well recent reports have revealed that the BBB has been selling “Good” ratings to companies who are willing to pay so I wouldn't be surprised if this were the case with them as well.
At any rate, I hope this article sheds a little more light on the truths about the Credit Bureaus. Many consumers are unaware of how they operate. However, if equipped with the proper knowledge and tools, consumers may be able to fend for themselves when fighting for accurate credit reports.