THE NEW BREED OF CREDIT
BUREAUS
Like many credit-conscious consumers, you've probably heard
the horror stories about errors on your credit
report (a recent study says as many as 70 percent contain
them) and how important it is to do an annual
credit-report checkup. But you may not be prepared for
the moment when you're writing a check for your household
grocery purchase - and it's rejected. Or when you apply
for a new loan or credit card and you're turned down because
of a bad debt on a rental apartment - that you never lived
in. These credit calamities really do happen. Diane Ryan from
Eureka, Calif., found this out the hard way. She first discovered
that her name was used to rent a university apartment in Sacramento
when she was turned down for a loan at Bank of America. After
getting a copy of her credit report, she saw that it listed
a bad debt with a collection
agency attempting to collect
the judgment amount from an eviction lawsuit.
Despite the fact that she has lived in the
same home she owns for the past 31 years, Ryan was listed
with a tenant-screening service as having defaulted on a rental
debt. Even after reporting all of this to her state Public
Interest Research Group (PIRG), Ryan is still wrestling to
clear her report.
And the worst part for her - and any of a rising number of
unwitting consumers - is that she didn't even know about the
problem until her loan application was refused. Credit reporting
agencies (CRAs), like check-verification bureaus and tenant-screening
services, aren't exactly new. In fact, each time you write
a check for a retail purchase it's probably OK'd by one
of the check services -more than 86,000 retailers use
them.
But now joining the ranks of these"consumer
blacklists" are debit-card, bureaus and collection agencies.
Even your telephone-bill paying habits are prey: The Justice
Department recently approved a request by phone companies
to create a clearinghouse of information about consumers who
have had problems paying their long-distance bills that would
be shared among any participating carrier. That means long-distance
giants like AT&T, Sprint and MCI could supply information
about you, or tap into an existing file on you, to find out
whether you've defaulted on a phone bill.
"Check-verification
and guarantee services seem to be multiplying like rats, and
the consumers I've spoken with over the years are unhappy
with their treatment by both the merchants and banks who put
them on the lists, and also with the customer service at the
bureau when the consumer has a dispute," said PIRG's
Ed Mierzwinski. The most bizarre part of the problem is that
the information in all these records may not even be yours
- it may be the product of an identity
theft, as was the case with Diane Ryan. When the info
is your own, there's still way too much of it floating around.
Consider the following laundry list of data
peddled by these CRAs: real property info, voter registration
files, motor vehicle registration and license info, occupational
licensing records, court lawsuit info, vital stats like marriage,
divorce and death records, info from medical
records and, of course, all of your credit accounts. One
tenant screener that sells its services on the Web even claims
it can provide info about renters who've written bad
checks and/or damaged their apartments, as well as give
an overall profile of prior "rental habits," such
as how long they stay in one place.
But the good news is that you are protected.
Clarke Brinckerhoff, an attorney with the FTC's Bureau of
Consumer Protection, says that "CRAs like check-verification
companies and tenant-screening services come under the umbrella
of the Fair Credit Reporting
Act (FCRA). Consumers who have experiences with any of
these have all the rights that this Act guarantees."
While you may not feel like wading through the legalese of
a government Act, the FCRA
is a powerful tool - and you should know how to use it.
Under new amendments that went into effect in September 1997,
you can do all of the following should you have a negative
experience with any of the new breed of bureaus:
Find out the name of anyone who received
your credit report in the last year (or in the last two
years for employment purposes). Any company that denies your
application for credit must supply the name and address of
the CRA that provided the negative information. Get
a free copy of your credit report when your application
is denied (provided you request it within 60 days).
Once you file a dispute,
the CRA as well as the company that provided the negative
information are required by law to investigate it. You
have the right to add an explanation of up to 100 words to
your report if the dispute is not resolved to your satisfaction.
If your problem is with a check-verification
or guarantee service, under the new amendments, when you report
a fraud or a mistake in your record, the retailer must investigate
it and report back to you within 30 days. Even the new telephone
clearinghouse will have to comply with FCRA requirements,
which means you should be able to request a copy of your long-distance
report and correct any inaccuracies. Should you find yourself
in a credit predicament, the document "Credit and Your
Consumer Rights" at the FTC's Web site (www.ftc.gov)
states in plain English what your rights are.
If and when that awful moment ever comes
that your check is refused at the supermarket or any other
store, you can also contact the check verifier directly for
quicker access to your check-writing report. Here are the
toll-free numbers for the major ones:
-ChexSystems (800/428-9623)
-CheckRite (800/766-2748)
-SCAN (800/262-7771)
-TeleCheck (800/710-9898)
-Equifax (888/532-0179)
-International Check Services (800/526-5380)
Bottom line, as technology increases the
ways and means of getting information about you and giving
it out to the people who want it, it's more important than
ever to protect
your good credit - and your financial future. "Consumers,
credit bureaus and legislators should do everything possible
to see that credit reports tell the truth the whole truth,
and nothing but the truth," says Ed Mierzwinski. You
can only control one of those three,- so make sure you give
your credit health a regular checkup and stay informed of
your rights.
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