Who Do Reporting Companies Work For?
As you gain a clearer picture of how errors work, you should take a close look at the credit-reporting companies. What are their motivations? Who do they work for?
The Customer Is Always Right
Credit-reporting companies work for their customers. Their customers include anybody who buys credit reports and credit scores from them. For the most part, their customers are lenders. Lenders pull your credit anytime they need to evaluate your creditworthiness, like when you apply for loans. In addition, lenders check your credit periodically. They check to see if you're falling behind on other accounts or racking up too much debt, among other things. Credit-reporting companies make a lot of money from their lending customers.
In addition to paying the credit-reporting companies, lenders provide information. They report on their customers regularly. Since credit-reporting companies sell information, they love the organizations that give it to them. Of course, lenders report to the credit-reporting companies to discourage borrowers from defaulting. Some lenders do not report anything unless you fall behind, but the reputable ones report both good and bad information.
Credit-reporting companies do not want to do a bad job for their customers. What's the worst thing that could happen to a lender? A borrower could default — declaring bankruptcy and getting a liquidation of his debts. If this happens, the lender is unable to collect any money. Therefore, creditreporting companies want to make sure that they expose any potential risks. They would rather portray a consumer as more risky than less risky.
Consumers, on the other hand, are more of a nuisance. If they ever call at all, it's with a complaint. They seem to think that there is an error somewhere that needs to be fixed. However, credit-reporting companies only report information that is provided to them. They don't make the stuff up, right? Yes and no.
Do I have a right to dispute inaccuracies in my credit reports?
Yes. Under the Fair Credit Reporting Act, you have a right to have accurate credit reports. You can take action to get errors fixed, including contacting credit-reporting companies, disputing errors, and bringing lawsuits against organizations that violate your rights. Don't let anybody tell you otherwise.
The credit-reporting companies use some artistic license when they figure out how to group account records together. Most of the time, it works beautifully. Just imagine how difficult it must be to provide a record on an individual. People get married and change their names. They use different versions of their name on different account applications, and they move across the country. To add to the confusion, the creditors may provide them with incomplete or incorrect information. The credit-reporting companies have to contend with all of these challenges.
When things go wrong, people tend to complain, and the credit-reporting companies are inundated with disputes. Consumers claim that a delinquent account is not theirs, or is not delinquent. They claim to be alive when their credit report clearly says that they are deceased. They claim all sorts of things. All of these claims must be investigated, and that takes resources. Since these consumers are not paying customers, you can imagine how eager the company is to satisfy their needs.
In his book