The credit squeeze: a double standard. Flickr / alancleaver_2000 / CC-BY

Credit Rating Bureaus issue reports that affect the financial life of everyone who has ever used or will ever use credit. All consumers are judged by their credit rating when it comes to credit cards, mortgages and even job offers.  It may be disturbing to some, however, to learn that the bureaus have a two-tiered system when it comes to resolving errors: one standard for the well-known, well-connected and powerful people — and one for everyone else.

VIPs receive immediate help

According to the New York Times, the three major agencies, Equifax, Experian and TransUnion, keep a VIP list including celebrities, politicians and other influential people. Those on the list receive special attention and most errors are corrected immediately.

Average consumer routed into automated system

For the average credit user, however, disputes are routed into a largely automated system. Complaints are routinely transferred to overseas subcontractors who make quick decisions based on a cursory glance at records. Consumers then can only challenge disputes through the expensive court system.

Influence overshadows accountability

“The legal responsibility of the credit reporting agencies and of the creditors is well established,” said Leonard Bennett, a consumer lawyer in Newport News, Va. “There is a requirement that they do meaningful research and analysis, and it is almost never done.”

As credit has become more and more essential to survival in the modern financial world, the credit rating bureaus have become increasingly powerful.  Their reports determine the all-important credit score that lenders use to determine creditworthiness.  However, consumer advocacy groups claim their accountability has not kept pace with their influence.

Bureaus work for lenders, not consumers

“There is no neutrality in the credit reporting agencies,” said John Ulzheimer, 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.”

Reaction of credit rating bureaus

When questioned about the VIP category, TransUnion said all consumers “have the ability to speak to a live representative.” Equifax claimed all consumers who came to the bureau were provided with a number for customer service.  Experian denied that it had a VIP list.

FTC to report on bureau accuracy

Next year the Federal Trade Commission is expected to release a study on the accuracy of credit reports.  The report may or may not contain recommendations for legislative action.

Sources

New York Times

MSN

Telegraph

Call 888-5-OPTOUT to cut the pre-approved junk mail offers. Otherwise, someone can reach in and steal your identity. (Photo Credit: CC BY-ND/Tony Webster/Flickr)

Pre-approved credit offers no doubt litter your mailbox, particularly if you’ve recently had a bankruptcy discharged. The lure of “buy now, pay later” has ensnared many American consumers, but it doesn’t have to be that way. By calling 888-5-OPTOUT (1-888-567-8688), U.S. consumers can opt out of pre-approved credit card offers with the three major credit bureaus: Equifax, TransUnion and Experian. This is beneficial not only for consumers looking to rebuild their credit without the need for emergency loans, but for those who would prefer to give perpetrators of identity theft less ammunition.

888-5-OPTOUT sweeps the credit card offers away

Call 888-5-OPTOUT if you’re sick of all the direct marketing lists that seem to hound you daily. No more credit card offers and no more advertisements for credit products via postal mail will show up. Call from your home phone line and be prepared to give your Social Security number. If the prospect of revealing those digits worries you, put your mind at ease – the service is recommended by the Federal Trade Commission.

If you prefer, send a letter

Similar to the 888-5-OPTOUT telephone option, consumers can opt-out of pre-approved credit offers and related advertising via mail. Here’s a sample opt-out letter. Make sure that your request is sent to all three credit bureaus:

Options
Equifax, Inc.
P.O. Box 740123
Atlanta, GA 30374-0123

Experian
901 West Bond
Lincoln, NE 68521
Attn: Consumer Services Department

TransUnion
Name Removal Option
P.O. Box 505
Woodlyn, PA 19094

Past confusion over 888-5-OPTOUT

Several years ago, there was a widespread e-mail message that extolled the virtues of 888-5-OPTOUT, but it did so with erroneous information. Specifically, the message claimed that a consumer would have to opt out if they didn’t want the credit bureaus from releasing their sensitive data to “anyone who requests it.” According to Privacy Rights Clearinghouse, this muddles elements of two federal laws, the Financial Services Modernization Act and the Fair Credit Reporting Act. Essentially, the confusion comes down to whether 888-5-OPTOUT was actually connected to the former of the above laws, which it wasn’t. Thus, the controversy was somewhat minor.

The take-away here is that 888-5-OPTOUT is a useful tool for consumers. Avoid the credit card trap, avoid identity theft and perhaps you’ll be in a position where you won’t need bad credit loans.

Sources:

CBS Moneywatch

Federal Trade Commission

Privacy Rights Clearinghouse

Opt out of junk mail