You need a reasonable credit history to lead a decent life in the US. Everything from getting a job to renting or buying a house depends on what the three credit reporting bureaus say about how financially responsible you are. Unfortunately, the credit bureaus have no real way of knowing who is a responsible person and who is not. All they know is to listen to what the businesses you use have to say about you.
These businesses, with millions of customers, often get their records crossed. When a Jay Doe fails to pay his phone bill, their clerks could make a mistake and put it on the account of John Doe, the person who occupies Johns’s rental unit after he leaves it. When this phone company passes on this inaccurate information to the credit bureaus, they have no way of checking if the clerk at the phone company did a good job. They file the payment default under whatever name the phone company says. The credit bureaus are just rubber stamp organizations.
Poor John Doe wakes up one day, he finds that he can’t get a job in the financial sector because his credit reports say that he is obviously not financially responsible. This can be a nightmare for him. It could take him days to figure out what’s happened and to file a dispute with the credit bureaus. They can take anything from a month to a year or more to verify that a mistake has indeed been made. Meanwhile, poor John can forget about a job at any financial institution. He can also forget about getting a new rental home or a new cell phone plan. It can be Kafkaesque.
It does not end there. Even if the credit bureaus do straighten out the mistake on their file on John, the phone company can still maintain the mistake. After a few years, they could take all their uncollectible bills and sell them to debt collection agencies. Since the phone company still maintains the mistake on its books, the debt collectors who buy those uncollectible bills now start all over again. They can begin to harass John for the imaginary phone bill that he did not pay.
Usually, nothing happens when you raise a dispute with the credit bureaus
Credit bureau disputes often yield no results at all. If you have an inaccurate item on your credit report, you could be anxious about trying to help the credit bureau locate it and straighten it up. You could prepare all the proof you find, create a detailed file on it and send it to them. Usually, a clerk there (or their outsourced office in another country) gives it a mere cursory glance to understand what you’re saying and creates a dispute summary. The “summary” they prepare needs to be as short as a tweet. He also assigns the summary a computer and category code.
Next, your dispute summary passes over to another computer that does more automated case vetting. At some point, they locate the offending item on your credit report and put out an inquiry to the business that reported it. At that business, an overworked clerk usually has no time for these problems. He merely replies that everything checks out. When this happens, there’s little you can do.
If you ask the credit union for information on the name of the business that first made the mistake (so that you can talk to them yourself) they will refuse.
For an enlightening Video report on this, check out CBS 60 Minutes 40 Million Mistakes.
The law is largely ignored
Under the Fair Credit Reporting Act, the credit bureaus are required to do a reasonable investigation of each dispute that comes up. The Cushing vs. TransUnion case sets a great precedent on how thorough the investigation needs to be. In reality, this never happens.
Since 2012, the Consumer Financial Protection Bureau, a federal watchdog, has authority to conduct investigations of their own to find out how well the credit bureaus deal with disputes.
Investigations like these aren’t easy. Since a good part of the credit bureaus’ work is outsourced to other countries where labor is cheap, an investigation would involve sending investigators to other countries.
If you are caught up in a credit report dispute that does not seem to end, suing the credit bureau is often the only way out.
If you want help getting your credit information corrected (or need help with improving your credit rating), go visit Credit Repair Magic
