Getting a mistake fixed in your credit report can be an ordeal -- unless you're Mick Jagger. Reports the NYT:
The three major agencies, Equifax, Experian and TransUnion, keep a V.I.P. list of sorts, according to consumer lawyers and legal documents, consisting of celebrities, politicians, judges and other influential people. Those on the list -- and they may not even realize they are on it -- get special help from workers in the United States in fixing mistakes on their credit reports. Any errors are usually corrected immediately, one lawyer said.And the great unwashed? Disputes go straight into the proverbial (and automated) black box, where overseas phone reps spend a grand total of two minutes trying to sort our your problem. The credit bureaus are supposed to investigate, but seldom actually do, experts say.
The credit agencies don't sweat such disputes for one very simple reason -- they don't have to. First, their customers aren't consumers, but rather the creditors that provide or use credit data. As one expert told the Times:
"There is no neutrality in the credit reporting agencies," said John Ulzheimer, who has been an expert witness in more than 80 credit-related cases and is president of consumer education at SmartCredit.com. "They work for the lenders who buy credit reports from them, and anyone who suggests otherwise is not being intellectually honest."Second, getting to the bottom of why, say, grandma suddenly stopped payment on her Harley-Davidson is expensive. That's why some bureaus pay their outsourced contractors as little as 57 cents to try to resolve a customer complaint. It's also why reps commonly have dispute quotas requiring them to blow through dozens of fraud, identity theft or other complaints per day. In fact, as Kevin Drum points out, the credit agencies actually make money peddling services to protect consumers from the bureaus' own mistakes.
Put another way, why would these companies wrack up costs helping people who aren't even their customers?
If the credit bureaus don't need consumers, by contrast, consumers need the bureaus. Unless you have satchels of cash laying around, you obviously need a decent credit history when it comes to, say, buying a car, attending college or, increasingly, even getting a job. The upshot: Most consumers are captive to companies that have little use for them.
Under the law, meanwhile, consumers have little recourse in forcing the credit bureaus to correct an incorrect report. Given the importance of a good credit record these days, that's wrong. It's also economically counterproductive -- people can't spend or borrow if their credit is unfairly marred.
The solution? Well, if the Consumer Financial Protection Bureau survives the Republican hit-job in Congress, it will have authority to develop stricter dispute-resolution rules. The goal here is to ensure that when mistakes crop up in your credit report, everyone can get some satisfaction.
Image from Flickr user Dina Regine via Wikimedia Commons, CC 2.0