Credit Errors: As Simple as Black & White (With a Massive Heap of Gray)
What is a credit error? Credit companies and long-winded consumer experts would go on and on about how simple credit errors are. Either negative credit information is right (meaning that the bill was paid late), or it was wrong (meaning that the bill wasn't paid late). Judging by their two-dimensional response, one could properly conclude that neither the credit companies nor the consumer experts have actually ever met a "consumer" in the flesh. Once you begin to talk to actual people with actual negative credit on their credit file, and you hear their stories and how their negative credit came about, the black and white world of credit errors becomes a hopeless swirling mess of gray. What's more, when you involve the lawyers (if you dare), and you begin to research the case law surrounding credit inaccuracy, you discover that the definition of "inaccurate credit" is hopelessly complicated.
The people who're paid to differentiate between which credit listings a person should dispute and which they should not, are professionals who usually don't really have the foggiest clue what actual people in actual life are experiencing when they struggle with the world of credit. These "consumer experts" go about their day making pronouncements about "consumers" without much practical knowledge regarding what it's really like to be a typical American. Even in the oft-used term "consumer," the experts reveal an impersonal view of people as machines that use up goods and services (eg. "consumers.") Who's going blame them, though? It's not like the consumer experts and regulatory pundits man "consumer' help lines where they receive hundreds of calls a day from normal people telling reciting story after story about how credit reporting is unfair. Without putting themselves in a position to speak with actual people, there's no way an expert would guess the complexity of the world of credit accuracy/inaccuracy. Credit correction attorneys, on the other hand, actually do man "help lines" where hundreds of people call in to discuss their credit dilemmas. Perhaps, it's because of this that these attorneys have a healthier respect for the gray areas surrounding credit disputes.
The average person (as well as many experts) have a logical, but completely erroneous, view of credit accuracy or inaccuracy. If you ask a "consumer advocate" to give an example of a person who has "accurate" bad credit, they usually tell a story like this:
"Deadbeat Denny was out of control. He'd worked at the Quick-e-mart sweeping floors for the last three years, so his income was steady, but Denny had applied for an arm-full of credit card offers. When the credit cards came rolling in, Denny went on a spending spree. He took his girlfriend out to steak dinner, he bought a dozen pairs of baggy, 'gangster' pants and he picked up low-profile rims for his car. Before Deadbeat Denny knew it, the credit card bills came rolling in and Denny suddenly realized that he didn't make enough money to pay for all the credit he'd racked up and still pay his rent. After a couple of months of trying to pay his bills, Denny noticed that he wasn't having as much fun because he was pouring a lot of his paycheck into credit card bills. Pretty soon, he began chucking the bills as soon as they arrived and focused on more important life issues such as buying the latest rap album by '50 Cent.' Denny's credit score crashed and the youngster was left with a pile of charged off credit cards and collection accounts."
So, according to most people, it's a pretty simple matter to distinguish the Deadbeat Denny's of the world from the rest of us. Also, according to the "experts," Denny's the kind of person who should not have a "second chance" and who should not take advantage of credit repair. Denny should live with his painful results and learn a lesson. (In fact, most people, including the authors, would agree: Denny should probably sit out of the credit game until he's matured a little.)
But, while Denny's story may be on the "black" end of the black-and-white spectrum of credit accuracy, what most people forget is that there is a huge grey area and that most Americans with bad credit fall into the grey.
Here's a better example -- an example of a situation far more common then Deadbeat Denny's, in our experience:
"Average Joe was struggling to pay his bills, but he was making some headway. Since his divorce with Average Jane, not only was he lonely, but he was over-his-head financially. The divorce judge had ordered Joe to pay some bills and Jane to pay others. Since they both worked, it was reasonable to expect them to divide up the debt. But, Joe happened to know that Jane wasn't paying her debts, because Joe had luckily received a couple of calls from the creditors who had his name and number. Joe had a sinking feeling that (even though the judge had assigned the debts to Jane) the credit companies would still wreck his credit if she didn't pay. So, Joe called all the creditors and made sure they knew his address and how to bill him if Jane didn't pay. He left explicit instructions that they send him a duplicate bill with each month's payment. But, after the first couple of months, it became clear that the credit companies weren't going to keep him informed. If he got a call at all from them, it was after the payments were already past due. Some of the credit card companies wouldn't even speak to him because Jane was the primary card holder and he wasn't on file as someone authorized to deal with the accounts. Joe ended up paying both his bills and the bills that Jane missed. He could barely do that and survive, but Joe was doing everything he could to preserve his credit. Inevitably, though, Joe missed some bills because the credit companies never called him and Jane just didn't pay. As fate would have it, all Joe's efforts couldn't keep things from falling through the cracks. Bad credit began to show up on his credit report and by the time that Joe knew there was a problem, it was too late. Joe was a good credit risk -- he paid he bills and paid them on time. But, because of the divorce, Jane's unpaid bills were coming back to haunt him and the bad credit history that Jane created would dog Joe for a very long time."
When you start speaking with actual Americans who suffer from bad credit, it's a parade of one "Average Joe" story after another. Rarely do you come upon a Deadbeat Denny story -- probably because Deadbeat Dennys don't often seek credit correction assistance. But the "consumer experts" usually assume that most people are Deadbeat Dennys when they criticize credit repair. They assume that the vast majority of people with bad credit deserve their bad credit and should leave it alone.
Many of these same consumer groups get totally entangled with one another when it comes to even measuring credit inaccuracy. There is a hodge-podge lineup of studies that say all kinds of contradictory things about credit report accuracy. Not even the agreeable experts agree on how to define inaccurate credit listings. (The authors of this book would like to note here that we are not, in fact, agreeable. Therefore, we feel that all such studies are hogwash generated by frazzled neophytes who wouldn't recognize a credit inaccuracy if it bit them on the leg.) In any case, the consumer groups and their many studies all agree on one thing: the credit reports are monstrously screwed up.
For your reading pleasure, we herein provide the most sensational points of a few of these studies:
U.S. Public Interest Research Group, in their 2005 study, discovered that 79% of credit reports contain errors and that 25% of those contain enough...
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