Articles Posted in Credit Reports

The Consumer Financial Protection Bureau has a report on the 26 million Americans who are “credit invisible.” The Bureau found that one in every 10 adults do not have any credit history with a nationwide consumer reporting agency. About 189 million Americans have credit records that can be scored.

The report also found that Black consumers, Hispanic consumers, and consumers in low-income neighborhoods are more likely to have no credit history with a nationwide consumer reporting agency or not enough current credit history to produce a credit score.

Another 19 million consumers have unscored credit records, which is 8 percent of the adult population. The credit scoring models, which are based on credit histories, don’t produce any score for people with insufficient credit history or a lack of recent credit history.

Credit.com has a report on some relatively unknown credit reports. For example, Equifax has a report it calls “work number” that provides employment and income verification data obtained from private companies. Fannie Mae said mortgage companies could use this report in lieu of pay stubs effective mid-2016.

Landlords often look at applicants’ credit reports before deciding whether to rent an apartment or other living space. There are many such credit reports that include former addresses, eviction history and the like.

Cable companies and utilities have an “exchange” with information on customers’ history of paying their cable or utility bills, connection requests, defaults, and fraudulent information.

The American Banker magazine has an article that asks “Can credit bureaus can finally be tamed?”

The article describes a “tough fix-it order” imposed by federal and state officials that was supposed to force the bureaus to clean up inaccuracies and better respond to consumer complaints. But that happened 25 years ago and the problems with the bureaus persist.

The article notes that lawyers, advocates and regulators agree that problems of accuracy and how disputes are handled continue to be problems. In 2012 the FTC found that one in four consumers have potential mistakes on their credit reports and one in 20 may have errors significant enough to negatively impact how much he or she pays for a loan, or whether credit is available. That means 11 million consumers have material errors on the reports that may affect whether they can get a mortgage loan, a car or even a job. In 2014, the Consumer Financial Protection Bureau received 45,000 complaints about the credit bureaus.

The January 2015 issue of Consumer Reports has an excellent article on credit reports. It is especially useful for any consumer who discovers a problem with his or her reports, but does not know how to begin to fix the problem. The article has specific advice on how to dispute errors in the reports. It also describes what goes into consumers’ credit scores and ways to rehab your credit score.

Many of you know you can get free credit reports once a year from Experian, Equifax and Trans Union by going to annualcreditreport.com (or you may call 1.877.322.8228 and use the prompts). But what you may not know is that there are quite a few other credit-related reports you may obtain that relate to your credit standing. These reports may be useful in checking for ID theft or the source of inaccuracies in your credit history. Some of the more useful reports are as follows:

1) Public Records. LexisNexis Personal Reports contain information on public records relating to property you have purchased or sold, criminal history, liens and bankruptcy. You may request a copy of your LexisNexis report by sending a request via www.personalreports.lexisnexis.com or you may call 1.866.312.8102 for information on how request your report.

2) Check Writing History. Banks report bounced checks to three companies. You may get your Chex Systems report by calling 1.800.428.9623 or go to ConsumerDebit.com.  You may get your Certegy Check Systems report, by calling 1.866.543.6315 or go to askcertegy.com. For TeleCheck call 1.866.543.6315.

Here are some of the most common myths concerning credit reports.

1) I haven’t done anything wrong so my credit reports must be OK. Your credit reports may have errors that affect your credit standing even if you did nothing to cause the errors. By some estimates, 70% of credit reports have errors. The errors may be lowering your credit score, which will mean you may have to pay a higher interest rate on credit. Morale to this story is to periodically download your credit reports and check for errors. If you find any errors, send dispute letters to the credit reporting agency.

2) Checking credit reports will hurt my credit score. You may check your own credit report as often as you like. There will be effect on your credit score. Confusion may arise from the fact that when you apply for credit and the creditor pulls your credit report, a hard inquiry will appear on your credit report. Excessive numbers of hard inquiries will lower your score somewhat. If you are shopping for a mortgage or car, you may end up with a lot of inquiries, but FICO, the leading source of credit scores, will count inquiries for a car or mortgage in any 30 day period as just one inquiry.

Parents should periodically check their children’s credit reports. The reason is that fraudsters sometimes steal the kids’ identity. They know that children likely won’t notice their identity has been stolen and parents don’t typically check their credit reports. A good time to check is when a child is 16. At that point, there is time to take action to correct the reports.

Children should not have credit reports and so if there is a credit report it may be because someone has stolen the child’s identity. A research firm found that one in 40 households with children under the age of 18 had at least one child whose personal information was affected by identity theft.

According to Credit.com the reasons to be concerned about such identity theft include the possibility a debt collector may harass a child to pay a debt, a child might not be able to open a checking account due to negative credit history that does not belong to the child, or when the child applies for a driver’s license, the child may find someone else has obtained a license in the child’s name.

As everyone knows, foreclosures and accompanied recession caused tremendous economic damage affecting millions of consumers. These events have adversely affected the credit standing of millions of our citizens. The National Consumer Law Center has published an excellent report describing the problem and what should be done to mitigate the problems.

Consumers who lost their homes due to foreclosure inevitably end up with a report of a foreclosure on their credit reports. These reports knock their credit scores down by 100 to 150 points. Even when a homeowner avoided foreclosure by resorting to a short sale, a loan modification, or deed-in-lieu, the owner’s credit score was adversely affected.

The banks and credit reporting agencies have not lived up to the requirements of the FCRA in many cases in reporting on such real estate transactions. For example, some lenders, such as Chase Bank, report that a foreclosure was started and that the property was sold for less than full value when what really happened is that the property was sold in a short sale. When someone pulls the consumer’s credit report, what is reported is a foreclosure rather than short sale. Under various lending programs, a consumer is eligible to get a new home loan with a short sale having been reported, but not if the report merely references a foreclosure.

Yesterday’s NYTImes has an op-ed how the credit bureaus sometimes mix the files of one consumer with another. Mixed files result when a credit bureau issues a report on a consumer that includes the credit files of a different person. When the other person has negative accounts like charge-offs, repossessed car loans, etc. the innocent consumer cannot get credit from banks, can’t open a checking account, can’t get a car loan, etc.

The op-ed piece gives the Judy Ann Thomas case as an example. She lived in Ohio, but the credit bureau mixed applied for a loan. But the bank mixed up her record with the file of a Utah woman.

A 2012 study by The Columbus Dispatch analyzed 30,000 complaints to the F.T.C.; of those, 1,500 people reported that their files included some other person’s credit information. Nearly a third said the credit agencies did not correct the errors after being asked to do so.

CreditCards.com has an informative report on who is permitted to view consumers’ credit reports. The FCRA limits access to persons with a “permissible purpose.” Persons may access a consumer’s credit files if the consumer gives written consent or in connection with a credit transaction to which the consumer consented. Persons may also access a consumer’s credits for the purpose of checking an applicant’s employment history, in connection with an application for insurance, and for other limited purposes.

The most common permissible purpose violation is in the case of identity theft. CreditCards.com describes a case in which a clerk at a law firm that was representing a mortgage company who misused a consumer’s credit report. The firm had legitimate access to the credit reporting system, but the rogue employee used it to set up credit cards and get loans in consumer’s name.

Some cases arise out of family legal cases. If one spouse or his or her attorney pulls a spouse’s credit report, there may be a violation of the FCRA.