Credit Bureaus Exposed

Posted by Rochelle Davis on

What is your definition of a Credit Bureau? Some would say it's a Government Agency that is responsible for reporting and maintaining financial information about consumers. INCORRECT. 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 for government agencies as the name itself appears to be a bit misleading.

The truth is Credit Bureaus (also known as “Credit Reporting Agencies”) are private corporations. They are no different from other big name corporations like Walmart or Bank of America. Their primary role is to collect, store, maintain, and sell information about your life and financial history and they are paid rather handsomely for it!

The problem with these agencies is that most of the time, they are selling inaccurate information about the consumers in their database. Although not fully responsible for the inaccurate information, they do not have, nor do they care to adopt, a dependable, valid, and sufficient process for taking great care and ensuring that all of their data is 100% accurate. This has lead to some 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 terrible reputation for inaccuracies, Credit Reporting Agencies have also developed automated systems for processing consumer disputes. With the volume of disputes they received daily, it is clear why they might adopt such a system. Unfortunately, the system is insufficient and unfair to consumers who are honestly trying to right the wrongs on their credit reports. In a nutshell, here is how the dispute process works:

  • The mail is received and envelopes are opened by a machine
  • Dispute Letters are automatically extracted and separated by a machine
  • Dispute Letters are then placed on a conveyor belt and sent through an OCR (Optical Character Recognition) machine to be read, interpreted, and processed by 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, it may be deemed as “frivolous” and the dispute legally ignored
  • If not deemed "frivolous", based on the machine's interpretation, a determination is made by the machine about how to process the letter
  • Ultimately, there is never a need for intervention by a real human being. For the most part, the machine performs every step of the process
  • Many of this correspondence is received by the Credit Reporting Agencies as batch files. At the stroke of a key, these companies can click to verify all accounts sent to them without having actually verified each individual account.

While these practices remain standard in the credit reporting industry they are unfair and unjust. Credit Reporting Agencies (CRA's) continue to accumulate wealth at the expense of consumers and their bad credit. By neglecting one's poor credit history, the CRA's are able to sell account information to predatory lenders, as well as other organizations, who are looking to lend at particularly high interest rates. The worse the credit, the more they are able to charge and profit. Therefore, bad credit remains EXTREMELY valuable to them. These corporations have absolutely no incentive for helping consumers improve their credit ratings.

Many consumers are unaware of how Credit Reporting Agencies operate. However, now that you are equipped with the proper knowledge and tools, make the choice to protect yourself by repairing your credit beginning now. 

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