Chapter Four 

Credit Reports and Credit Scoring
Made Easy

Despite the risks, easy consumer credit is a tool that can be used artfully by a smart person who is willing to accept certain guidance. At the heart of consumer credit is the credit report and credit score. In fact, the credit report with an accompanying credit score is by far the most important piece of personal information reviewed when you apply for a loan. The credit score, is one hundred percent derived from what is on your credit report. There are three main credit reporting agencies in the United States: Experian, Equifax and Trans Union. These credit bureaus collect data from creditors (banks, collection agencies, credit card companies, etc.) and from public records (bankruptcies, liens, judgments, etc.) and basically generate a report card on you each time someone pulls a credit report in your name. By the way, in case you were wondering, the credit bureaus are NOT owned or controlled by the government. In fact, the credit bureaus spend considerable time in "hot water" with the government due to the intense regulation and oversight applied to their industry by the Federal Trade Commission and the states' attorneys general.

Prior to 1996, the three main credit bureaus, Experian, Equifax and Trans Union, worked pretty hard at being hard-to-reach. In fact, it was nearly impossible to find an actual credit bureau telephone number, answered by an actual person. The message was clear: don't write, don't call, we don't care.

Then, the federal government got fed up with the non-stop complaints flooding in about credit bureaus and they enacted an amendment to the Fair Credit Reporting Act requiring that the three credit bureaus maintain telephone numbers that consumers could use to call in and handle credit report errors.

The bureaus dutifully complied. The phone lines were put in place and the phone numbers were made active. But, they overlooked one, small detail: they didn't provide the staff to answer the phones. Millions of phone calls went unanswered and millions of consumers were put on hold for unreasonable periods of time. The credit bureaus went so far as to specifically block certain calls from specific area codes.

Ultimately, the Federal Trade Commission came crashing down on them and hit them all with fines totaling $2.5 million. The bureaus quickly cleaned up their act. Sort of.

Credit Revolution: Path of the Smart Consumer
© 2007 John C. Heath, Esq., Dr. Randy Padawer, Jayson R. Orvis. All Rights Reserved.
Published by Far Cliffs Multimedia, LLC

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