A Personal Anecdote About Credit Reporting Agencies

We live in a society that runs on credit. You can't buy a car, a house, furniture, electronics, or pretty much anything expensive unless you can pass a credit check that indicates you're not a deadbeat. A good credit score is a requirement of modern life*, opening all sorts of doors and greasing the financial skids in a society where paying cash for large purchases can arouse the interest of the police and the local DEA office*.

And how does one get a good credit score? Well, of course, by paying ones bills on time, not having a criminal record, and so on. But where does that score come from? Who gives it to you?

There are three major credit reporting agencies: Equifax, TransUnion, and Experian, who hoover up all the available information about you, your income, your shopping and payment history, whether you own or rent your home, and pretty much everything else. Using their own proprietary systems, they crunch all those numbers down into a score that tells merchants and service providers whether or not it's safe to bet on your ability to pay for the things you buy.

The problems with this system are manifold, and many of them are coming to light. Equifax, for instance, is in deep kimchi with the government** over the lack of security of their databases, which have been repeatedly plundered by crooks looking to steal the financial and personal information we're required to provide to fuel the credit reporting system. And all of the credit reporting agencies maintain that they - not you - own all the information they hold about you and your life, and can sell it to anyone they choose like any other commodity.

But what if the information they have about you is wrong?

In theory, you can petition the credit reporting agencies to correct erroneous information they have in your record ... in practice, though, getting something changed is neither easy nor are results guaranteed. Here's a personal example ...

One day in the late 1970s, I was reviewing my credit history when I noticed something odd: a Gulf Oil Company credit card I was sure I didn't own. I had applied for and received credit cards from two other gas companies, but I had never gotten one from Gulf. I contacted the credit reporting agency to ask about it, and they said they would remove it from the record if I could prove it wasn't mine. How do I prove a negative, I wanted to know. We'll let you know when we're satisfied, they answered.

Well, I did some digging and made some phone calls and finally figured out what the problem was: there was indeed a Gulf Oil credit card issued - to my father, who has the same name as I, but not the same middle initial. The number on his card matched the number of the card shown on my credit report.

Problem solved, you'd think. Not so.

I notified the credit reporting agency in writing, explaining the error and pointing out that the card in question also showed up on my father's credit report. The agency, however, did not accept my explanation. So my father wrote a letter, too. The agency still maintained the record was accurate and refused to change it.

We went back and forth for nearly a year and I finally gave up. Since I was young and in the first decade of establishing my own credit history, my father's credit was better than my own, and he always paid off that card every month, I figured the heck with it. The Gulf card finally disappeared from my credit history sometime in the mid-1990s.

I tell you this story because I don't trust any of the credit reporting agencies, and neither should you. I realize that they are a necessary evil in a society based on credit, but they lack adult supervision, take no responsibility for the accuracy of the data they hold, and make a lot of money selling the information we we have no choice but to provide them.

Quite a racket, no?

Have a good day. Watch your credit report carefully ... the credit reporting agencies won't.

More thoughts tomorrow.

Bilbo

* I remember an ad for a credit card - I think it was BankAmericard (now Visa) back in the days when credit cards were a relatively new thing ... the ad noted how convenient it was to "pay with your good name," as if that were as good as cash on the barrelhead.

** Not to worry, though, with the current administration in power, I'm sure they'll come out all right.