Dispute Inaccurate Credit Items on Your Credit Reports
February 2, 2019
What are Credit Bureaus?
Credit bureaus are private companies that compile all the data you and your lenders see on your credit reports. You may have heard of the three credit bureaus - Experian, TransUnion, and Equifax. The data on your credit reports includes personal information like your name, mailing address, and a list of your employers, as well as credit accounts like loans and credit cards that make up your credit history. It doesn’t include information like your age, race, or marital status, or any criminal records. Also, credit reports are not available to just anyone who asks for them, and the credit bureaus must have your permission in order to provide your credit reports to a lender or employer.
The credit bureaus’ job is to collect all this information and provide it at the request of lenders, consumers, and even employers who are looking at candidates to hire. When a lender evaluates a person’s credit history, they are likely to go to one of the three main credit bureaus to check that person’s creditworthiness.
Make Sure they Have it Right
The bureaus perform the daunting task of collecting information about each of over two hundred million adults in the U.S. who use credit. The process for doing this, however, is not a perfect one. Whether because of human error, identity theft, or the rigid nature of the credit reporting system, the credit bureaus store information on the credit reports of millions of people that is inaccurate, misleading, or biased.
Fortunately, consumers have the right to dispute these questionable negative items with the credit bureaus in an effort to get them removed from their credit reports. Lexington Law's credit repair services have helped clients remove millions of these questionable credit listings.
We Help You Work with all 3 Credit Bureaus
- Where to start: Before you can dispute any information, start with an education. We help you understand the unfair and inaccurate items on your credit reports and the process to remove them.
- Credit errors happen: Almost 70% of all reports have errors. Chances are, yours has them too. Unfortunately, some of these errors may be lowering your score unfairly.
- Help from a law firm: We've helped our clients navigate the credit bureaus our clients. While are cases are different and results may vary, last year, they saw 10,000,000 items removed from their reports across the three bureaus.
- How we repair credit: We first review your credit, then work with the bureaus to remove unfair and inaccurate negative items. We help monitor and prepare a custom plan to rebuild your credit.
What is their History?
Before the existence of these consumer credit reporting agencies, banks and other lenders usually based lending decisions on personal interviews with borrowers, as well as any prior relationship that the borrower may have had with the bank or lender. This meant that if a borrower didn't have a relationship with the institution already, it was more difficult to get approved for a loan or a line of credit. This also made for a difficult, inefficient, and unreliable method of estimating credit risk. There were many local credit agencies that kept consumers' information on file, but there was nothing on a national scale.
In an effort to gather more information about consumers that could be used to calculate credit risk, banks began working with other creditors to create consumer credit reports that contained information about a person's credit use from multiple sources. Over time, the task of managing credit reports was outsourced to third party credit bureaus that provided consumer credit reports to the banks and lenders in exchange for a fee.
Today, what was once a large number of credit bureaus spread across the country has, through the process of mergers and acquisitions, been reduced to the three major credit bureaus: TransUnion, Equifax, and Experian, although there are other credit reporting agencies used for other purposes.
- TransUnion: TransUnion began as the Union Tank Car Company in 1968. The company leased railcars and created TransUnion as the parent holding company. In 1969, TransUnion acquired the Credit Bureau of Cook County which had 3.6 million files on consumers. After acquiring this credit bureau, TransUnion continued expanding until 1988 when they achieved “full coverage” in the United States on almost every consumer in the country with an active credit profile. As of 2015, TransUnion operates in 33 countries.
- Equifax: Equifax goes back to 1899 when Retail Credit Company was established. This company originated as a group of tailors from Great Britain who began swapping information about consumers that didn’t pay their debts. In 1920, the company had expanded throughout the United States and by 1965 it became a publicly held corporation. Equifax operates in 19 countries.
- Experian: Experian is the oldest of the credit bureaus. It goes back as far as 1826 when The Society of Guardians for the Protection of Tradesmen against Swindlers, Sharpers, and other Fraudulent Persons was formed in Manchester, England. Fast-forward to 1897 when a man named Jim Chilton began collecting information on credit risks and came in contact with the Society of Guardians (who shortened their name later on) in order to pool the information, they had on consumers. As credit purchases became more popular, Experian emerged to continue the work of the Society of Guardians and Jim Chilton. As technology advanced, more data was compiled, allowing Experian to expand. Experian now operates in 37 countries, and its main headquarters in in Ireland, unlike Equifax and TransUnion, which are headquartered in the United States.
What is a Credit Report?
A credit report is just what it sounds like - a report of all your credit accounts including loans and credit cards. The information can be positive or negative and shows whether you've made payments on time or late, or when accounts are charged off or sold to collections. Credit reports also include public records like liens, bankruptcies, and judgments, as well as personal information like your name, previous and current mailing addresses, and previous and current employment. It's important for individuals to read and review their credit report to ensure all items are accurate.
Under the Fair Credit Reporting Act (FCRA), consumers are entitled to one free copy of their TransUnion, Equifax, and Experian reports each year, which can be accessed at annualcreditreport.com. Since credit can be difficult to understand, there are myths surrounding the bureaus that may make it seem like they are out to get consumers, when really, they're not. The major credit bureaus are just keeping track of credit history for lenders and other companies that may need access to your credit reports. We're going to talk about some of these misconceptions.
Myths about the Credit Bureaus
- They Government Agencies: This is completely false. Many consumers believe that consumer reporting agencies and credit scores are controlled by the government. Experian, TranUnion, and Equifax are for-profit companies and they are not government entities. However, there are federal laws regulating how the consumer credit reporting agencies report information but your credit reports and scores aren't determined by the government. These federal laws are in place in order to make sure that what is being reported isn't unfair to consumers. Credit bureaus receive information from financial institutions on open accounts and the credit bureaus use this information to compile your credit reports.
- By Law, Negative Items Must Be Reported for Seven Years: This is also a myth. As previously mentioned, the consumer credit bureaus are not government entities, so it doesn't make sense that the law would require them to report negative information for any period of time. The bureaus are regulated by the FCRA in how long negative information can stay on your reports. The fact is that creditors don't have to report anything to the credit bureaus - good or bad. There is a maximum amount of time that information can be reported, but no minimum. So if a creditor tells you that a negative account has to stay on your credit reports "by law," this is inaccurate.
- Attempting to Repair Credit is Impossible and Unlawful: Many consumers are unaware that they have rights that allow them to repair their credit. Under the FCRA, information on consumers' credit reports must be fair, accurate, and substantiated. Consumers can challenge inaccurate, unverified, or unfair accounts either directly with the credit reporting agencies or with their creditors, or engage the services of a credit repair company to help them. On the other hand however, if you continue challenging information that is accurate, the credit bureaus don't have to investigate your disputes, and may deem these as frivolous.
- Information and Scores are the Same with each Bureau:TransUnion, Equifax, and Experian are three different businesses that conduct business independently of one another. Each credit bureau has its own credit scoring model - as a matter of fact, they have multiple scoring models that are used for different purposes. Also, financial institutions don't have to report information to any of the bureaus. Some creditors may only choose to furnish information to one or two of the credit agencies rather than all three of them. When consumers apply for credit, a lender may pull a score from any of the credit bureaus, a FICO score, or a VantageScore, which can all be different from each other. FICO and VantageScore are not models that the credit bureaus calculate and are separate companies.
Specialized Credit Bureaus
TransUnion, Equifax, and Experian are the three main credit bureaus that most lenders pull information from. There are scenarios other than applying for a line of credit or a loan in which your reports may be pulled, such as when you're applying for a job, getting an insurance quote, or renting an apartment. There are other consumer reporting agencies that specialize in compiling these types of reports, and many consumers are unaware that they exist. Unlike the big three credit bureaus which are required to provide credit reports annually at no cost, these reports don't fall under the FCRA.
- ChexSystems: ChexSystems is a bureau that collects consumers’ banking information. Contrary to popular belief, savings and checking accounts are not included on regular credit reports. ChexSystems collects data such as overdrafts and bounced checks from banks. When a consumer goes to a bank or credit union to open a new savings or checking account, the bank is likely to pull a report from ChexSystems in order to see if the potential client is a risk.
- Contact Law Enforcement. A CLUE Report is provided by a bureau called LexisNexis. CLUE is an acronym for Comprehensive Loss Underwriting Exchange. This type of credit report is used by insurance companies and keeps track of property losses (such as cars and homes). If you haven’t had a loss within the past seven years, then you will likely have a clear report. This report is used when consumers are looking to change insurance companies in order to see how likely they are to file claims.
- Credit Reports for Business: Like consumers, businesses also have credit scores. Experian and Equifax provide credit scores for businesses as well as other specialized credit bureaus such as Moody's and Dun & Bradstreet. The scales for business credit scores are different and typically fall on a scale of 0-100 (the typical scale for consumer credit scores is 300-850, although these differ as well, depending on the model). Along with payment history and credit utilization, company size and industry risk are two additional factors that are used in these models for determining scores.
- Utilities and Rent: When you apply to rent an apartment or set up a new utilities account, the landlord, property manager, or utility company are likely to ruIn your credit. These can show up as hard inquiries on your credit reports, although on-time payments for these bills are not always reported. However, if you default on these payments or get evicted, the accounts can go to collections and they will likely be reported to the credit bureaus. However, Experian does offer services for landlords and rental property companies to report rent payments. If you are a renter looking to build credit and you make your payments on-time, this is a great opportunity for you. If your landlord or property management company doesn’t report these payments, you can ask them to do so by submitting a request to Experian in order to help you build better credit.
- Employment: Another common scenario for having your credit reports pulled from the credit bureaus is when applying for a new job. Potential employers are allowed to pull your credit reports but not your credit scores. There are a lot of third-party companies that provide these services to employers, but TransUnion and Experian also provide credit reports to companies looking to hire potential candidates. Besides looking at credit reports, employers are also likely to do background and criminal checks. Some jobs, such as occupations in the military that require high security clearance, will not accept candidates that have delinquencies on their credit reports.
- Medical Bills: There is no credit report specifically for medical bills, although unpaid medical bills do tend to show up in collections. As a mater of fact, medical bills make up the majority of collections on credit reports, and many consumers who would have otherwise spotless reports often end up with medical bills in collections. There is no credit bureau that only reports medical bills, but there are changes in how they are being reported that is good news for consumers. As of September 2017, providers must allow a 180-day grace period before sending overdue medical bills to collections. And now, scoring models like FICO and VantageScore are not weighing medical bills as heavily.
Contact the Credit Bureaus
Now that you have all this information about the 3 bureaus. You may be wondering if you’re able to contact them. The answer is yes – they’re very accessible. Here’s how you can contact them:
- TransUnion: website - https://www.transunion.com/
- Experian: website - https://www.experian.com/
- Equifax: website - https://www.equifax.com/personal/
Of course, if you don't want to contact them yourself, let Lexington Law Firm do the legwork for you. Sometimes it can be daunting to speak with the reporting agencies. Lexington Law Firm has over a decade of experience in working with the credit bureaus. Give our credit specialists a call today for a free credit consultation to see if we can help you with unfair, inaccurate, and unverified accounts on your credit reports.