Overlooked Little Known Credit Bureau Secrets

Credit Bureau Secrets

Little Secrets (song) (Photo credit: Wikipedia)

Overlooked Little Known Credit Bureau Secrets

Credit Bureau Secrets…..Deletion of paid Derogatories is legal.  There…I’ve said it again.  This settlement technique is critically important to consumers but is misreported over and over by so called self appointed experts.  Let me clarify this even further.  I am sure of this not only because I do it for clients all the time but because the legal underpinnings clearly leave it open.  Let’s put this question to rest.

The New Fair Credit Reporting Act, 609(c) (2)(E), signed by President Clinton in September of 1996 addresses the question as follows:

“…a consumer reporting agency is not required to remove accurate derogatory information from a consumer’s file, unless the information is outdated under section 605 or cannot be verified.”

“is not required” is artfully used by the drafters of the law instead of “can not.”  This was done to avoid facing the issue of “pay for deletion” head on.  Despite the fact that the big 3 credit reporting agencies…Equifax, Experian and Trans Union spent a reported $2 Million dollars lobbying Congress last year they could not prevail on lawmakers to change this language.  After all, Congress had already provided special deletion privileges for those who pay off delinquent student loans, thereby setting a precedent for this useful settlement tool.

Consumer reporting agencies have provisions in some of their contracts with their customers forbidding “pay for deletion” as it’s called.  There are always several managers with authority to change this policy on a case by case basis.  Anything they are responsible for reporting and confirming they can change.

Credit Scores Sold by Credit Bureaus are FAKO, not FICO

Credit bureaus have concocted their own credit scoring systems to sell to consumers.  Apparently they save money by doing this instead of paying the Fair Isaac Corporation (FICO) to use the same score as the lenders use 90 percent of the time.  The result is the consumer gets a “credit score” that is meaningfully different at least 1 time in 5.  This is according to the latest study by the FTC’s Consumer Financial Protection Bureau.  They rationalize this by referring to their own scores as “educational” scores.  Industry professionals have a different term for this.  We call them FAKO scores.  Many consumers don’t realize that they are getting a different score than the one they are ultimately going to be judged by.  This can result in a lot of wasted time and further damage to those who apply for credit that they simply do not qualify for. This results in a wasted inquiry.  It also can result in less favorable terms for those who are accepted.

Credit Bureau Secrets Include the Selling of Other Personal Information

Credit bureaus keep files on 63 percent of the U.S. population.  These files contain not only information on how reliably you pay your bills but also

  • Present and former addresses going back for decades.  This will indicate how many times you have moved which some consider an indicator of stability.
  • Present and former employers which is usually incomplete.  Employers have no duty to report new hires or job changes.
  • Name changes which can indicate the number of marriages.
  • Bankruptcies, tax and other liens, child support payments.

Since federal law permits employers to pull credit reports of applicants there are many things in your credit report that can cost you a job besides a few late payments.  Credit Bureau Secrets that are just as disturbing are the fact that this information is for sale to more than lenders.  Insurers, debt collectors and skip tracers pay a lot of money for access to your file.  This makes up a large percentage of the income of the credit bureaus.

Credit Bureau Secrets…..Don’t Bypass the Credit Bureau With Your Dispute

Many consumers who feel they have been wronged attempt to settle with the creditor who reported the wrong information.  This can work out fine if an agreement is reached and the information is corrected.  But if the dispute is not settled with the original creditor the consumer must dispute with the reporting credit reporting agency.  If you don’t give the credit reporting agency the chance to correct it you will lose your right to go to court.

Overlooked Little Known Credit Bureau Secrets will be amended and supplemented from time to time.  Stay tuned!

Enhanced by Zemanta
The following two tabs change content below.
After practicing law for 37 years Edward F. St. Onge, Sr. now devotes all his time to helping consumers achieve a high credit score with amazing speed. Learn the counter-intuitive secrets to credit scoring through his down to earth instructions backed by extensive knowledge of the laws and trends. All of the latest tricks and techniques that they don't want you to know now at your disposal. At last a level playing field for the consumer!

Latest posts by Edward St. Onge (see all)