The Truth About Credit Bureaus
Think those credit bureaus like Equifax, Experian, and TransUnion are set up to work in your favor? Err..think again!
Here’s 3 interesting myth vs. reality points you might not know about credit bureaus.
Myth: Credit bureaus are government or non-profit organizations. Nope!
Reality: Credit Bureaus are private organizations and are a BIG profit-based cog in the entire credit and banking machine.
Myth: Their primary motivation is reporting your credit accurately. Not!
Reality: Selling your information to potential lenders and other organizations is where the real bread and butter exists for credit bureaus. All one has to do is look at the massive number of lawsuits against credit bureaus, and it certainly looks like accurate reporting is pretty low on the priority list.
With today’s technology, they could easily do a far better job of reporting credit accurately. When you look closely at most any credit report, there’s a rampant amount of conflicting and incomplete data being reported. It would not be difficult at all to improve that drastically by implementing some checks and balances within their own system.
Part of the problem is much of the sloppy data they get is automatically fed to them by creditors. By hardcoding more checks and balances in their computer systems, a lot of flagged credit reporting items would need to be corrected. For the credit bureaus, that means a lot more time, money, and staff that they probably don’t want to hire. Unfortunately, it’s easier to just leave accuracy monitoring up to the consumer.
Myth: Credit bureaus carefully investigate errors. Wrong!
Reality: To reduce costs, most dispute investigations are automated through a system called e-oscar, which is a complete joke in terms of thoroughly verifying anything.
In addition to that, as has been testified in court, workers at credit bureaus are under time quotas for processing disputes, which typically results in an expectation of having approximately about 4 minutes to process each one. Hardly enough time to actually verify much of anything in an accurate way.
Finally, to make things worse, many other aspects of dispute work are outsourced to cheap third party contractors from places like Costa Rica, The Philippines, and India. For public records like tax liens, judgements, and bankruptcies, sometimes unreliable third party contractors are used, which leads to even more potential mistakes.
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Is it right to completely blame credit bureaus for all this? That’s hard to say. It seems as though the entire credit system and existing laws are probably more to blame than anything, as the current operations of credit bureaus are mainly a resulting product of that system.
Unfortunately, as it stands now, it’s up to you as a consumer to use whatever legal methods you can to make sure your credit file is up to par.
