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Credit Bureaus: Who Are They And What Do They Do?

Netiva Floyd-Heard -- Credit bureaus: friend or foe? A credit management specialist explains why it's up to YOU to monitor the accuracy of your personal information.

Most people assume that the three credit reporting agencies -- Equifax, Experian, & Transunion -- are government agencies whose job is to protect the consumer. That couldn't be furthest from the truth. If you look on any of their websites in the "About Us," "Who We Are" or "What We Do" section you won't find one mention of "rights" as it relates to consumers. They really couldn't give two squats about us.

Credit bureaus are privately held, billion dollar companies whose main purpose is to make money, that's what for-profit companies do right? They store data that lenders furnish them -- whether accurate or inaccurate -- about our credit relationship with them and sell it. Simple right? This simple business model generates over $4 billion a year!

One source of income for them comes from selling the information on our credit reports to other lenders, employers, insurance companies, credit card companies -- and whoever else you authorize to view your credit information. Not only do they provide them with raw data, but they also sell them different ways of analyzing the data to determine the risk of extending credit to us. In addition to selling our information to lenders they also sell our information to us -- credit scores, credit monitoring services, fraud protection, identity theft prevention -- interestingly enough this area has quickly become one of their biggest sources of income. And those pre-approved offers in our mailbox every week, or junk mail? Yep, they got our information from the credit bureaus, too. Companies subscribe to a service provided by the three credit bureaus that sells them a list of consumer's credit information that fit a pre-determined criteria.

Now, contrary to popular belief, credit bureaus do not have any input on whether you should be approved for a loan or not; that is purely based on the credit criteria of the lender you're working with. However, by using all of the information that has been placed on your credit report (payment history, personal information, and credit habits) and FICO's method of scoring that data, they do provide them with how creditworthy you are.

This is why it's so important to ensure that the information they are reporting is accurate. It would be nice if they would do their job according to the Fair Credit Reporting Act and make sure they have proof that the information they are storing is true and up-to-date -- after all those inaccuracies could cost you $1,000s -- but that won't happen. Thus the burden of ensuring accuracy is on YOU. You are responsible for catching errors; they couldn't care less if it's wrong and they hate it even more when we challenge this inaccurate information by disputing it. Why? Because it's time consuming and time is money. Remember, I said they're main purpose is to make money? Credit bureaus store more than 200 million files on consumers; do you know how much money (time) it would take to ensure that everything is accurate and to store proof of accuracy?

We've seen the statistics; I have 2 videos that show proof of consumers having inaccurate information on their reports, the credit reporting agencies knowing this and still refusing to correct it! The latest statistic shows that more than 40,000,000 Americans are walking around with errors on their credit reports right now. I personally think this number is off; I've honestly never seen a credit report that was 100% accurate; like NEVER. Now you may say, well you work with people with bad credit so of course you see the worst of the worst, right? WRONG! I've been a Realtor for 12 years and I've seen people with great credit have errors as well. What's my point? Hmm, how can I put this?

CHECK YOUR CREDIT REPORT OFTEN!

Now you might say; but what about all the rules and regulations that the government has in place to make the credit bureaus act in the best interest of the consumer? My answer is what about them? Look on the FTC's website and see how many complaints are out there right now regarding credit bureaus; look on the Consumer Financial Protection Bureau's website and see how many complaints have been filed as well! There are thousands! But remember, this is about money. So, if you're making billions of dollars and you're getting fined a few million you're still winning, right? What's the incentive to change? I rest my case. I recommend pulling one credit report every 4 months from http://www.annualcreditreport.com. Don't worry about a score; focus on the data and if errors are found; dispute them right away. Opt out of those lists sold to other companies to prevent them from selling your information (optoutprescreen.com). Don't let the credit bureaus cost you $1000s while they make billions.

If assistance is needed; contact us right away. We take pleasure in making sure the credit bureaus take their precious time, resources and money to verify and prove that the information on your credit is 100% accurate.

Source: Ezinearticles

Netiva Floyd-Heard is a Credit Management Specialist and licensed IL Real Estate Broker. For over 10 years she has been assisting and empowering consumers with the tools and resources needed to improve their credit scores and overall financial health. Her passion in the industry has led her clients and referral partners to affectionately refer to her as "The FICO Coach". For more information on her credit management and credit repair services, visit her blog at http://www.mnhcreditsolutions.com.

© 2015 Netiva Floyd-Heard

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