In The Blogs

Credit Report Hell

| Wed May. 20, 2009 11:11 AM PDT

This morning I got an email from reader SD about a recent experience with the credit reporting industry:

Through some screwups and misunderstandings settling my father's estate, we were hit with a tax lien. We immediately cleared it up, but a year or so later when I went to get a car loan there it was on the record. Got a notarized proof of clearance on it, sent it to the credit reporting agency. A few years after that, we got a home improvement loan and there it was. My wife was visiting our daughter recently in San Diego and looking at houses and a realtor ran a credit report and there it was.

It appears that when any credit reporting agency gets some dirt on you, they immediately tell all the peer operations....who tell all that they work with, and on and on. Not only that, but it's nearly impossible to ferret out every instance of such misinformation (which should be the credit reporting agency's responsibility to clean up), AND the chain reaction keeps going until the same piece of disinformation that you originally expunged from, say, Experian, comes BACK to them and they enter it their database against you AGAIN.

Financial organizations should not only be made liable/responsible for correcting this kind of thing, but should be responsible for making sure that all instances of it are expunged.

As it is, they love and live for dirt on you, and take no responsibility for its correctness or the integrity of their data. And you never find out, all the while suffering under the bad credit score unknowingly until you formally take out some kind of loan....

Credit reporting agencies don't care about making sure their reports are accurate. Why should they? There's no penalty for screwing up someone's life.

If the tax lien automatically showed up on SD's credit report, it should just as automatically be removed when it's taken care of. Why should SD even have to handle this in the first place? Beyond that, there should be straightforward procedures, mandated by law, for correcting your credit report. Likewise, there should be straightforward procedures, mandated by law, for ensuring that corrections are sent immediately to every credit reporting firm. Anyone who doesn't correct their records within 24 hours should be liable for statutory damages. End of story. Do that, and guess what? Credit reporting agencies will suddenly start caring about the accuracy of their reports.

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Kevin Drum is a political blogger for Mother Jones. For more of his stories, click here.

Comments

Good grief

Submitted by Brian on Wed May. 20, 2009 12:18 PM PDT.

I'm a "fewer regulations please" kind of a guy, Kevin, but your solution here sounds fine to me. Responsibility is good.

What if a credit reporting

Submitted by Anonymous (not verified) on Wed May. 20, 2009 12:20 PM PDT.

What if a credit reporting agency purposefully raises a demographic group's average score, say 50 points? Wouldn't members of that demographic enjoy more of the prosperity that comes it the higher score? Want a free ride?

My father and I share the

Submitted by flounder2 (not verified) on Wed May. 20, 2009 12:23 PM PDT.

My father and I share the same name. Some of his stuff pops up occasionally on my credit report and then spread to the other 3. when I call them they are generally really rude. These people are crooks and their accountability-free business model needs to be eradicated.

Sounds familiar somehow

Submitted by gyrfalcon on Wed May. 20, 2009 1:13 PM PDT.

Oh, yeah. It's exactly like the TSA's "no-fly" list. The bureacratic mindset is just as widespread, maybe moreso, in the private sector as it is in the public.

This only proves

Submitted by Rush (not verified) on Wed May. 20, 2009 1:35 PM PDT.

The market works! Government makes everything worse!

When some fraudulent charges

Submitted by JS (not verified) on Wed May. 20, 2009 1:36 PM PDT.

When some fraudulent charges appeared on my credit card statement a few years ago, I asked for my credit reports and discovered that one of them included employers I never worked for. (There was nothing negative there -- it was just completely inaccurate). I went through all suggested procedures but nothing was removed from my report. Credit reports are like those roach motels -- bugs check in but they never check out.

What galls me is when you

Submitted by Crissa (not verified) on Wed May. 20, 2009 2:03 PM PDT.

What galls me is when you get them to expunge something, they don't keep records of it being expunged, so the same thing can come back over and over again, like your email. And worse, if they do keep a record of it being expunged... lenders then use that against you, acting as if a correction is just as bad as the act it's corrected! SeaFirst, a Seattle-based BofA, was sued for putting these holds in people's records - which locked them into using their services because no other bank would touch someone with that report on their record. And even when they 'fixed' it, no one would still touch those in the class because it was still in the record. And yet, the the credit reporting services still do this even after this big class action lawsuit ten years ago took out an entire bank.

Wow...

Submitted by Anonymous (not verified) on Wed May. 20, 2009 2:05 PM PDT.

I'm not used to being on the other side here, but there are a few problems with your rant. First, there is a procedure, mandated by law, for correcting a credit report: it's called the Fair Credit Reporting Act (and amended by the Fair and Accurate Credit Transactions Act). And a credit reporting company not following the law is liable for damages. (The law gives them 30 days to correct errors, not 24 hours, but that was reasonable 10 years ago when the bill was passed.) SD wasn't clear in his e-mail, but my guess is that the tax lien did not "re-appear" on his credit report. It was probably changed from a tax lien to a paid tax lien, which is correct. (Unless he never actually had a tax lien filed against him, but that doesn't sound like it was the case.) You could certainly argue that the penalties for errors should be greater, but it's not correct to say that no regulatory framework exists. (BTW, the real problem isn't with the credit reporting agencies, it's all the other holders of credit data [mostly retailers and lenders] that don't adequately safeguard customer data because they're not really financially liable for the identity theft that results from their lack of controls...)

True, there are procedures

Submitted by JS (not verified) on Wed May. 20, 2009 3:40 PM PDT.

True, there are procedures for reporting errors in the reports. Consumer reports says that 70% of errors thus reported are corrected -- but in 13% of the corrected cases the error re-appears. (I suppose this is to encourage all of us to buy credit report subscriptions to continuously monitor them). So it sounds like about 60% of reported errors are corrected. In my case, I made a report on-line (as they recommended) simply stating that some of the employers on my report were there in error. I listed them. I got back a letter from them saying that I provided insufficient information. They were putting the burden of proof on me to show that I had not worked for these employers. They did not spell out exactly what information I needed to provide, and they did not say what information they had and from where. Point is, THEY did not investigate. I guess I could have put a lawyer on the case but did not.

Quite correct

Submitted by The Lounsbury (not verified) on Thu May. 21, 2009 8:21 AM PDT.

In particular the last paragraph. It would appear that most commentators here have no clue as how credit reporting agencies work. Megan McArdle also has some very good observations here. Better processes for reporting are likely a good thing.

Tax Liens

Submitted by Keith M Ellis (not verified) on Wed May. 20, 2009 4:57 PM PDT.

"It was probably changed from a tax lien to a paid tax lien, which is correct." I have a similar situation, except with the further twist that the tax lien was incorrectly filed by the IRS and then removed when I supplied then with the information proving I didn't owe any taxes. The tax lien shows up on my credit reports as "paid", which isn't quite correct—I didn't pay it, the IRS rescinded it. Yet my attempt to have this changed on my credit reports were fruitless. In fact, all I asked was that it be noted on the reports that the lien was based on an IRS error and then removed when my tax recalculated. As it is, it appears that I had a large tax lien (upwards of 60K!) that I paid off. This doesn't seem right to me.

Explain this

Submitted by Cailte (not verified) on Wed May. 20, 2009 5:23 PM PDT.

In 1989, I learned that my credit report contained the information that Social Security had paid a death benefit on my Social Security number. I had this corrected but have had it turn up on my credit report twice more since then. Each time it has required me to take off from work at least half a day in order to go down the the Social Security office to get the paperwork proving that no such benefit has been paid. I think the regulatory framework in place is inadequate when I keep having to prove I am alive.

Where's The Lounsbury

Submitted by jrw on Wed May. 20, 2009 5:25 PM PDT.

to explain to us why this is all our fault?

In 1980 a bill belonging to

Submitted by A J Bean (not verified) on Wed May. 20, 2009 8:03 PM PDT.

In 1980 a bill belonging to someone with my first and last names, but a different middle name was forwarded to me erroneously. Last week we refinanced the house. Guess what name is still on my credit report 29 years later? I've tried.

Best solution might be the

Submitted by ajay (not verified) on Thu May. 21, 2009 12:39 AM PDT.

Best solution might be the libel courts: they're publishing damaging information which they know to be false. Sounds like malicious libel to me.

Government the answer?

Submitted by Anonymous (not verified) on Thu May. 21, 2009 7:23 AM PDT.

I'm a "fewer regulations please" kind of a guy, Kevin, but your solution here sounds fine to me. It sounds reasonable to me. And at a time when the government seems to be taking over more and more domains, I'm pleased to see that Kevin did not recommend making credit reporting a government function, because government agencies tend to be even worse. Which is easier -- accessing your credit report and getting it fixed or accessing info about you in the TSA database and getting that corrected? I have my own horror story about getting an erroneous driving citation removed from my record. After I replaced my license from a lost wallet, somebody provided the old license to the cop during a traffic stop. This was a years after I replaced the license -- so it was long expired and, obviously, the person using it did not match the photo (and should have been carefully scrutinized since the license was no longer valid). But the cop wrote up the citation anyway. And then, because the address was so old, the mailing from the court was not forwarded and I never received it. My first notification was from the state notifying me that my license had been suspended for failure to appear (the state database had the current address). So this was many months later -- how do you go about proving to the court's satisfaction that the cop stopped and ticketed somebody else using a stolen license? How do you even get to court (a couple of counties over) when your license has been suspended. Long after this was supposedly resolved, it kept popping up on my record. Even now, I don't know if it has been completely expunged. And how much interest do you think the police and courts had in checking out who owned the car that had been stopped? You know the answer already, don't you? So, yes, much better to have government policing private organizations than taking over the functions themselves -- no bureaucratic organization is ever as unaccountable as a government bureaucracy.