Many Americans never overspend and take great pride in
paying their bills on time. When they apply for credit, such as a mortgage,
however, they may discover some shocking news: A credit report indicating
seriously delinquent bills.
Most individuals
never give a second thought to the mounds of financial paperwork and personal
history that are accumulating in the files of consumer reporting agencies. Then
a crisis occurs. Perhaps it is an unexpected denial on a credit card or auto
loan, a refusal on an apartment, or an insurance premium increase. The Fair
Credit Reporting Act of 1970 provides a measure of control over the harm
third-party reports can do. Specifically, consumers must be told at their
request what their files contain, and inaccurate information must be deleted or
corrected.
Agencies
Two kinds of
agencies prepare reports on consumers, and the law covers both. Credit bureaus
collect objective financial data for use by bankers, retailers, credit card
issuers, and landlords. A spokesman for TRW Information Services (one of the
largest sources of consumer credit information with files on hundreds of millions
of people in all fifty states, making it an industry leader in credit
reporting) suggests that credit reports contain a great deal of sensitive
information.
Data in a typical
file is provided by creditors and gleaned from public records; it includes tax
liens, bankruptcy information, outstanding loans, and details of credit card
history, including the credit limit on each card, purchases, balances, and
payment records. TRW’s role is to compile this data.
Investigative
reporting agencies, on the other hand, may pry more deeply. These agencies are
generally hired by insurance companies considering taking on significant risk
or by employers screening for important or responsible job positions. Their
reports amount to a subjective assessment of lifestyle and character. An investigator
goes to employers and even neighbors to find the answers to such questions as:
Is the applicant involved in a hazardous job? . . . dangerous hobbies? . . . a
drug problem?
Reliability
Those who are
worried about the reliability of all this evidence can learn what’s in a
credit file or investigative report for a nominal fee, usually about $20. A
bank or the yellow pages can tell which credit bureaus conduct business in the
area.
The companies that
commission an investigative report must inform the subject of the report when
it has been done. Discovering which agency prepared the report is a simple
matter of asking the company that made the request. If a report jeopardizes
credit approval or a loan, the applicant has the right to know the “nature
and substance” of the information at no cost.
The creditor
desiring the information must disclose which firm prepared the report,
including its address. Should there be incorrect information, the agency has to
reinvestigate and confirm it, correct it, or delete it. Even if the
reinvestigation shows the material to be accurate, brief explanations of
extenuating circumstances can be added. Lists of everyone who has received
files within the past six months, or within the past two years if it was sent
for employment purposes, are available to the consumer. Should corrections be
necessary, all the requesting parties can be sent an updated version by the
reporting agency.
Should a credit
bureau or investigative agency prove uncooperative, a letter to the Federal
Trade Commission, Bureau of Consumer Protection, Washington, DC 20580, or your
state Attorney General’s office may expedite the process.
For the most
vigilant consumers, TRW has introduced a service that gives credit users
unlimited access to their files for a small fee every year. This is probably
only necessary for those who are the most active credit seekers; they can
investigate their file whenever they please for $20, or for free when turned
down for credit.
