From Alternet: http://www.alternet.org/economy/25-credit-information-flat-out-wrong-how-consumers-are-getting-screwed
It’s about time regulators take on the industry that impacts your financial fate.
By Odysseas Papadimitriou
November 16, 2012
Monopoly. We all know the game – one of the Parker Brothers’ best – as a quintessential American pastime with the potential to bring generations together (or spark heated arguments among those of us with a bit of a competitive streak). But when that term is applied not to board games, but instead to board rooms, it has a decidedly negative connotation. Everyone knows how important competition is to a free market economy, after all.
That’s what makes the ineptitude and pervasive conflicts of interest that mark the credit reporting and scoring industry due to a lack of competition so hard to fathom. It’s also what underscores the drastic need for reform.
Credit Reporting Conflicts of Interest
A relatively small number of companies – namely Experian, Equifax, and TransUnion – currently dominate the credit reporting space and use our credit data more as a means of advancing their own business interests than serving the needs of their customers (i.e. us and the lenders who review consumer credit reports). A perfect example of this is how Experian has made FICO Scores based on their reports — inaccessible to consumers , yet accessible to big banks. They did so to encourage use of their own in-house credit score, but the move also made it impossible for consumers to understand how they’re being rated by a lot of lenders. In other words, the ability for consumers to make sound financial decisions was expendable in the pursuit of maximized profits. That’s not the exception either, it’s the norm. The interests of credit reporting companies simply aren’t always in line with those of consumers (i.e. accurate and accessible data).
Credit Reporting Inaccuracies
Credit reporting conflicts of interest don’t represent the only downside stemming from the dearth of credit reporting competition either. We’ve also had to tolerate an alarming amount of inaccurate information in our credit reports. Studies have shown that as many as 25% of credit reports contain errors significant enough to cause a denial of credit. When you consider that the ability to build credit is perhaps more important than Internet access in this day and age – given that it’s used in extending loans, making employment decisions, tenant screening, evaluating vehicle lease applications, etc. – it’s obvious how detrimental credit report mistakes can be for you and me. And that’s not even to mention the fact that debt collectors use credit reports to go after consumers. If this information isn’t accurate, you could be forced to pay and undergo a lot of stress unnecessarily.
Continue reading at: http://www.alternet.org/economy/25-credit-information-flat-out-wrong-how-consumers-are-getting-screwed
