Understanding the Credit System

In this country, so much emphasis is placed on the credit system, yet it remains very mystical to so many consumers. Well, it is time to reveal to you the information the credit reporting agencies may not want you to know – your rights. To keep it simple, for Floridians, there are in essence three main Credit Reporting Agencies which “warehouse” information about you and your credit worthiness. They are Equifax, Experian, and TransUnion. All credit reporting agency must maintain the maximum accuracy possible when providing information on your credit worthiness. That is the aw.  These three companies are in competition with each other; therefore, in the past, they have not shared information. They each have their own system on how they gather information and on how they process said information.

It is in the gathering and the processing of this information that significant erroneous information begins to appear on your credit reports which lower your credit score. The credit reporting agencies like to point out that keeping track of all of this information is not an easy task. They stress how expensive it is to keep track of every consumer’s individual information, yet this year they have posted record profits. The highest profits ever!!!

In a recent case, to paraphrase the judge, he wrote … It is clear that the burden of complying with the FCRA is on the Credit Reporting Agencies, not on the consumer! Our firm believes the solution to helping consumers is telling them ” if the credit reporting agencies don’t comply with your rights, you have the right to file a law suit, force them to comply and correct your credit report, pay you statutory damages of up to $1,000, and pay your attorney’s fees.”  So exercise your rights!!!

April 2006 UPDATE: VantageScore, LLC — It is a new credit scoring system being promoted by the three main credit reporting agencies — with scores from 501 to 990. In addition, to simplify the process they will be adding a “grade” [A, B, C, D, F]. It will be interesting to see how the lending industry uses this new system.