Psychosis #1: The nature of credit bureaus.
LET'S BEGIN with a startling notion: The credit bureaus don't want you to read this. Why? Probably because those agencies,
along with the much larger banking institutions which depend upon them, desperately need consumers to buy into a few oft-told
myths which perpetuate their respective businesses. Unfortunately, though, not knowing the truth can cost a consumer tens
or even hundreds of thousands of dollars during an average lifetime.
Where credit bureaus are concerned, there are essentially two sets of "truths." On the one hand, there is the fairly meaningless
happy patter they want you to believe, which you can find repeated in just about every credit-related book and Internet site.
And then, of course, there's the real truth which I'll shortly elucidate.
Unfortunately, in order to truly embrace stark reality we must first peruse the prevailing fiction. So we'll examine both
here. This article will aim to demolish the social psychosis perpetuated by companies like Equifax, Experian, and TransUnion
and transport you to a veritable Valhalla of consumer mental health. Even better, maybe you'll end up saving a few bucks too.
Myth: There are three official credit bureaus, and these beloved and vital American institutions maintain accurate
records regarding the financial lives of every adult citizen.
There's so much wrong with practically every word of this fantasy that it's tough for a consumer advocate to know where
to begin.
First, the so-called "big three" consumer reporting agencies with which most Americans are familiar ‹ Equifax, Experian,
and TransUnion ‹ truly want consumers to believe that they've each been blessed with a sanctioned franchise. Actually,
the only reason such corporate behemoths now dominate the landscape is because their progenitors simply managed to swallow
up each other as they battled for preeminence through the decades. Greed, not official dictum, paved their way. Even if you didn't click the historical link in the previous sentence just now (and missed out on how, for example, the
company which became Equifax once used Welcome Wagon ladies to spy for them), suffice to say there is hardly anything "beloved"
about these privacy-busting companies.
Moreover, there are indeed other, newer, credit bureaus on the horizon (with names like Innovis, Lakeside, and NCTDE) which
hope to eventually eclipse today's major players. In fact, anybody who so desired could start their own credit reporting agency,
collect personal information about their friends and neighbors, and then attempt to sell that data to whoever would be nosy
enough to purchase it. Sure, federal law puts limits upon what can be reported and to whom, but nothing bars any one of us
from entering the field outright regardless.
So contrary to the prevailing perceptual reality, there are no official bureaus. And while most Americans perceive their
credit reports to have at least the same legal standing as their driving records, the truth is that the government had no
role in establishing the for-profit companies which produce them. Put bluntly, no law mandates a credit report's existence,
and such documents deserve as much respect as "The Weekly World News" supermarket tabloid or any other similarly unproven
list of allegations.
And what about the "accurate records" idea? Every serious study to date has reached the same conclusion: Credit reports are simply rife with errors.
Psychosis #2: Your credit report is reviewed carefully.
