Rich vs. Poor in Fixing Credit Report Errors

I stopped by Starbucks yesterday afternoon with my wife, daughter, and my mom. While waiting for our drinks, I looked at the front page of the Sunday edition of the New York Times. On the front page was an article titled, With Credit Bureaus, It Pays to be on V.I.P. List. Here are the opening paragraphs:

The credit rating bureaus, whose reports influence everything from credit cards to mortgages to job offers, have a two-tiered system for resolving errors — one for the rich, the well-connected, the well-known and the powerful, and the other for everyone else.

The three major agencies, Equifax, Experian and TransUnion, keep a V.I.P. list of sorts, according to consumer lawyers and legal documents, consisting of celebrities, politicians, judges and other influential people. Those on the list—and they may not even realize they are on it—get special help from workers in the United States in fixing mistakes on their credit reports. Any errors are usually corrected immediately, one lawyer said.

For everyone else, disputes are herded into a largely automated system. Their complaints are often electronically ferried to a subcontractor overseas, where a worker spends, on average, about two minutes figuring out the gist of the matter, boiling it down to a one-to-three-digit computer code that signifies the problem — “account not his/hers,” for example — and sending a dispute form to the creditor to investigate. Many times, consumer advocates say, the investigation translates to a perfunctory check of its records.

Why is this front page news?

Wouldn’t the rich, well-connected have lawyers and such to handle such matters? Is it any surprise that such errors would be taken care of quickly?

The bottom line is you have to be on your toes. You have to keep on eye on your credit report. The article mentions some lady who was denied a job because of a credit report error. It might be a good job to check your credit report before you start looking for a job.

7 thoughts on “Rich vs. Poor in Fixing Credit Report Errors”

  1. The lady should count herself lucky — who would want to work for an employer so shallow as to base hiring decisions on a credit report number.

  2. Credit bureaus really need to be regulated. As a mortgage lender, I often times have to help people get their credit fixed. You would not believe the errors on these reports. The problem is that the bureaus assume guilty until proven innocent.

    I see all kinds of people with depressed credit scores because they get into a legitimate argument with a vendor over $30 bucks and then tell the vendor to go screw themselves. Next thing you know, the vendor sends it to collection or reports a 30, 60, or 90 day late payment. The person’s credit is screwed and they wind up paying thousands more than they should have to on future credit.

    As that article mentions, consumers can’t take their business elsewhere with credit bureaus. Therefore, I think there should be a law that says the credit bureau AND creditor should contact the borrower PRIOR to any negative items being allowed on the credit report.

    By being proactive instead of reactive, creditors might find they would get paid as often times people over look payments mistakenly. Second, if there is a legitimate beef, consumers aren’t held hostage by creditors threatening to screw up their credit.

  3. I think you’ve missed the point of the article. It was about the unfairness of the system where the rich and famous seemingly get preferential treatment from companies that hold so much power over our financial futures. Let’s face it – they are a monopoly. So even if the lady in the article checked her credit report before her job search, her experience indicates there is a strong possibility nothing would’ve been done (or things would’ve been corrected very slowly.)

    Although I agree with a lot of what you say in your blog, not everything in life is a consequence of individual actions or choices. There are systems in place that will cater to the rich and powerful, and the ordinary and the average will get second class treatments. The article appears to want to simply expose that system, not engage in the so called “class warfare” that you’ve mentioned several times before.

    Yes, the rich and powerful may have lawyers at their disposal for such matters, but they are precisely the people who are not beholden to their credit reports. It’s important, but not a critical portion if their financial decision making portfolio. So if there’s anyone that do not need to be on such a VIP list, it’s them. But I guess that to those religiously subscribe to the American Bootstrap theory, the rich and powerful must have worked hard to “make it” and deserve the special treatment at the expense of everyone else.

  4. JK) Every business gives preferential treatment to their ‘rich & famous’ customers. Never gonna change that (and I don’t see anything necessarily wrong with that).

    However, in this case, the credit bureaus do not have individuals as their customers. The customers of credit bureaus are other companies/banks/lenders/creditors. There is no inherent incentive with the money flows to make the data accurate: which leads to Russ’s suggestion that ‘heavy regulation’ should be the incentive. I agree with Russ.

    The credit bureaus probably give preferential treatment to the ‘rich and famous’ to keep the bureaus out of the front page news when they screw up — it is hard for poor people to make front-page news against a corporation. Let me guess who else is on the VIP list: all politicians and their staff.

  5. Seriously, you would not believe how hard it is to get the bureaus to fix errors. Being able to get someone on the phone that 1) speaks english and 2) has the power to actually make corrections is next to impossible. I’ve even had creditors admit mistakes in writing and the credit bureaus will still fight you tooth and nail about correcting their reports.

    It is about people who can generate bad press for the bureaus having special ways to get things fixed. In some ways, it is also the credit bureaus snitching on themselves that their processes for fixing errors sucks and the reports are not very accurate.

    Consumers ought to be able to sue for slander.

    Credit reporting is important, but there needs to be more transparency in how they are used and how the scores are generated and if they really correlate with higher credit risk.

  6. I think the issue is that given the amount of power credit bureau’s have over someone’s financial life, they are obligated to correctly report the information. Allowing some (and not others) to easily correct their report fundamentally undermines the system. If the companies will not do it on their own, then either 1) the information should not be used for major financial decisions, and therefore devalue the credit report (and therefore the product of the credit burea) or 2) The product must be correct. In either case, the credit bureaus should fix the problem on their own, or be mandated to do it correctly. I do not advocate goverment regulations, but if the credit bureaus will not correct their own reports, than external pressures may be the only method to ensure their accuracy.

  7. Regulation of these bureaus sounds expensive. Couldn’t we just start sampling their data, check it for accuracy and then VERY publically stating which one is the best and which one is the worst. Then let them fight each other to be better than the others.

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