Credit Bureau - A Cautionary Tale

Not many people know that in the far distant past, I spent five months working for a credit bureau.  In those days, credit bureaus were localized and the credit files were cards stored in rotating shelves.  A potential creditor would call, and we would attempt to match the information they had with what was in the file.  Mistakes were common.  The consumer had to be vigilant to make sure their information was correct.  Flash forward, credit reporting agencies are centralized and data is electronic and instantaneous.  With all this available technology, you would assume the data is correct and clean.  Barring identity theft, your report should be your credit history.

My husband Barry and I check our reports. Two of our credit cards offer free credit scores.  Last year during the well-publicized data breaches, we received free credit monitoring.  When we applied for a home equity line, we were confident we had earned the best rate.  We were shocked to discover that Barry’s credit score was unusually low. 

Online, we navigated to www.annualcreditreport.com and pulled his reports. TransUnion and Equifax were fine.  Experian was a different story.  That report listed three bad debts.   All three were from the same person who had a different, name, address and employer than Barry.  He immediately called Experian.  The representative confirmed that the information should not have been attached to his file and removed it. Apparently, the debtor’s social security number was one digit different than Barry’s.  Somehow, the association had been made, and all of this person’s bad debts followed.     

This raised two big questions.  First, why was the score provided by the credit card so much higher?  That particular card pulls from TransUnion.  Second, why didn’t the credit monitoring service catch this?  They are only looking for new and unusual activity. These were old debts that were attached recently because of the social security number error.

Under a new settlement, the credit reporting agencies have specific guidelines to handle and investigate disputes.  No longer will you simply be referred back to the lender. You can read more here:  credit reporting settlement.  

Remember, there are three agencies, and the information from each one can be very different.  You are entitled to one free report per year from each of the agencies.  You can pull one free report, rotating the reporting agencies, every four months. Use this if your credit is established and you are monitoring.  If you are new to the credit game, pull all three reports. Before any major financing, pull all three again.  Make sure your information is accurate.  Be vigilant, know your credit history and know your rights. 

Material discussed is meant for general illustration and/or informational purposes only and it is not to be construed as investment, tax or legal advice.  Although the information has been gathered from sources believed to be reliable, please note that individual situations can vary.  Therefore, the information should be relied upon when coordinated with individual professional advice.