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A new cop on the credit reporting beat
New government oversight could give consumers more power.
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Kai Ryssdal: There's news today of the Consumer Financial Protection Bureau. Its first enforcement action: A $210 million fine against Capital One for tricking people into buying financial products they didn't need.
Also earlier this week, the CFPB started regulating credit rating agencies, including the dozens of consumer credit bureaus out there. Experian, Equifax and TransUnion are the ones we've all heard of. They keep files on the finances of 200-million-plus Americans and issue three billion credit reports a year.
You can't really get anywhere in this economy without credit, so on this installment of Money Matters -- our regular look at the news of the day and what it means for our bottom lines -- Marketplace's Mitchell Hartman reports on the CFPB, credit and us.
Mitchell Hartman: The all-important credit score is how lenders determine the interest you pay on a loan, and whether you get the money at all. A score in the mid-to-high-700s is brilliant. Below 620-or-so? Bad news.
Jamie Aprile teaches classics at the University of Texas, Austin. She scores around 700.
Jamie Aprile: I’m pretty proud that I’ve managed to keep it reasonably high.
Aprile just bought a first home with her husband. Dealing with the credit agencies has been confusing.
Aprile: There have been times when different agencies would have really different scores for us.
Aprile’s husband’s report used to be tainted by some unfortunate run-ins with creditors.
Aprile: Thankfully, they’ve all fallen off now because the whole seven-years thing has cycled through. But even after those things had passed, he had a 250-point difference between one agency and another. And he had to call the very, very low-score agency, I think, probably five or six times.
Aprile says she doesn’t have a clue how the companies come up with a credit score. Bill Sermons at the Center for Responsible Lending says no one does -- it’s proprietary.
Bill Sermons: It’s really just a black box. Studies have shown up to 40 percent of reports have errors in them.
The credit agency has to let you dispute any information you think is wrong.
Sermons: But the process is automated, and people feel that sometimes the responses they get don’t match up to the complaint that that they made. The CFPB has signaled they are going to address the dispute-resolution process, the fact that it puts all the burden on the consumer to deal with inaccuracies.
Gail Cunningham of the National Foundation for Credit Counseling says consumers also need to get on the ball.
Gail Cunningham: In spite of it being free of charge, 62 percent of consumers reported that they had not ordered a copy of their credit report in the last 12 months. Shame on them.
Shame on me. I pay the bank $10 a month to pull my credit reports -- that I could be getting for free.
I’m Mitchell Hartman for Marketplace.
Ryssdal: And if you have a consumer question about your credit, gas prices, bank fees or anything else, we want to hear it. Go to our Money Matters page.
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It's a pity, but lots of consumers do not understand all the importance of a good credit score. When they using some credit products that do not have enough information about what they use and the way one or another lending service can affect their credit scores. Advertisment make a strong imact on consumers and sometimes they hurry to try one or another product, but they do not know for sure what using of it can lead to. I am sure that lending providers should provide their consumers all the necessary information and let them know in what kind of occasions their credit scores can be harmed. In our debt-based economy there is a variety of loans and credit products and some people use them not because it's really necessary.
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I have heard several interviews about the Consumer Financial Protection Bureau heading up oversight of the credit bureaus. Additionally, I continue to hear commentators state "if there is something wrong on your credit report, be sure to dispute it." The good, bad, and the ugly of disputing items on one's credit report is as follows:
1) I called the Consumer Financial Protection Bureau to complain about:
a) credit bureaus lowering my credit score for paying off student loans that were refinanced and closed. Mind you, there is no open credit on a student loan. But by the very fact I paid them off, my credit score declined.
b) I signed up with Transunion to get my FREE credit scores from 3 bureaus...their advertisement leads consumers to believe they are purchasing all three reports. AND, I was charged $19.95 and when I looked at the report, Transunion wanted me to pay an additional $59+ for Experian and Equifax credit score and reporting information. WORSE, Transunion now has tons of advertising on the consumer's credit report AND you cannot see the details of your credit report on one screen. Each item details listed open in a separate window. I thought that I would get all of the details of my credit report if I printed it, NO SUCH THING EXISTS.
c) I discovered the "work around" to see all of the details of your credit report is to open up a dispute and the entire report is available.
d) Transunion, by law, is supposed to offer consumers the opportunity to write a 100 word dispute on their report. Transunion has a per-determined selection box without this option.
I am my own personal advocate, I took screen shots of Transunion's false advertising, advertising on my credit report, and all of the items listed above and wrote a detailed letter to the Federal Trade Commission, Consumer Financial Protection Bureau, Transunion, Senator Barney Frank, my senators. The squeeky wheel eventually gets the grease, just to shut up and go away. The louder the squeak by consumers, it is harder for these bureaus, senators, FTC, CFPB.
ABOUT MAKING DISPUTES ON YOUR CREDIT REPORT -- BE CAREFUL! SUCH DISPUTES CAN COME BACK TO BITE YOU!
2) if there is a past-due account posted from a creditor (falsely posted), the creditor does not have to remove it AND the dispute restarts the dispute all over again. I have 3 medial bills (by the way, many creditors no longer look at medical bills unless it is excessive) for services that were not rendered by the medical professionals. I complained to the medical office and nothing was done. I refused to pay them, so it went to collections. They showed up on my credit report so I disputed them 2 years after they were posted on my credit report. The dispute started the collection process all over again and added an additional 2 years of reporting onto my credit report.
The article should have made the distinction that while consumers are entitled to a one copy of their credit report from each credit reporting agency for free annually, credit scores are typically not free unless a lender does a "hard-pull "for example a bank for mortgage pre-approval and the bank subsequently mails you a copy of your credit score. Sometimes a consumer can take advantage of a free credit score promotion but you must cancel within the trial period to avoid them charging a monthly fee to your credit card.
Credit Karma www.creditkarma.com is a free service that monitors your credit, gives you suggestions on how to improve your score. I've found that it's fairly accurate. Credit Karma states my current credit score is 791. My wife and I were just pre-approved for a mortgage loan and the bank sent us copies of our credit scores and my current Experian credit score is 790.
Mitchell Hartman left listeners with that they can get unlimited free credit reports. It's my understanding that you - by law - are entitled to one per year from each of the credit reporting agencies. You still have to pay extra to get your credit score.
A very recent experience with Equifax and an application for a credit card from a national home improvement chain to purchase a new stove and refrigerator lead me to conclude the rating process is bogus. Ten months ago we refinanced our house. Our average credit score of the 3 major rating agencies was 780. Equifax now rates me at 720 for reasons that reveal a superficial sweep of data that is absent an income/debt ratio. They report my balances are too high in relation to my credit line. They won't acknowledge that my mortgage payments being paid at 4.5 times the standard rate for the 30-year term. A loan for for recreational trailer is financed through my credit union secured by a savings account. For a favorable rate the outstanding principal is reserved if I should default on a payment. And lastly the b.......s, report the ratio or number of revolving accounts with balances is too high. That would be one of two. My account with a major department store hasn't been used in almost two years. My VISA is extensively used. Almost 1/4 of my gross annual income goes through this account. In 2.5 years, (my easy to find information), shows one month, one in thirty, that I did not pay my balance in full. I paid less than $15 in interest in 2011. For this kind of financial history Equifax reported a score of 720. far from a bad number, but when considered by Citibank I was approved for a credit card with an APR of 25.99%. That is all of 1% lower than the highest rate in the credit range established by Citibank. When the reporting agencies conspire with the banks to suck the blood from working people how can the host of Marketplace decry the fact that consumers aren't spending enough to grow the economy. Thats a DUH!!! We are four years into a banking crisis caused by the banks and perpetuated by the banks. Isn't the banking industry making something like 40% of all the profit being made in this nation?Its way past time for banks to be broken apart. Its time that that they end their corrupt practices, and conduct their business in pure undiluted sunlight.
A very recent experience with Equifax and an application for a credit card from a national home improvement chain to purchase a new stove and refrigerator lead me to conclude the rating process is bogus. Ten months ago we refinanced our house. Our average credit score of the 3 major rating agencies was 780. Equifax now rates me at 720 for reasons that reveal a superficial sweep of data that is absent an income/debt ratio. They report my balances are too high in relation to my credit line. They won't acknowledge that my mortgage payments being paid at 4.5 times the standard rate for the 30-year term. A loan for for recreational trailer is financed through my credit union secured by a savings account. For a favorable rate the outstanding principal is reserved if I should default on a payment. And lastly the b.......s, report the ratio or number of revolving accounts with balances is too high. That would be one of two. My account with a major department store hasn't been used in almost two years. My VISA is extensively used. Almost 1/4 of my gross annual income goes through this account. In 2.5 years, (my easy to find information), shows one month, one in thirty, that I did not pay my balance in full. I paid less than $15 in interest in 2011. For this kind of financial history Equifax reported a score of 720. far from a bad number, but when considered by Citibank I was approved for a credit card with an APR of 25.99%. That is all of 1% lower than the highest rate in the credit range established by Citibank. When the reporting agencies conspire with the banks to suck the blood from working people how can the host of Marketplace decry the fact that consumers aren't spending enough to grow the economy. Thats a DUH!!! We are four years into a banking crisis caused by the banks and perpetuated by the banks. Isn't the banking industry making something like 40% of all the profit being made in this nation?Its way past time for banks to be broken apart. Its time that that they end their corrupt practices, and conduct their business in pure undiluted sunlight.
A very recent experience with Equifax and an application for a credit card from a national home improvement chain to purchase a new stove and refrigerator lead me to conclude the rating process is bogus. Ten months ago we refinanced our house. Our average credit score of the 3 major rating agencies was 780. Equifax now rates me at 720 for reasons that reveal a superficial sweep of data that is absent an income/debt ratio. They report my balances are too high in relation to my credit line. They won't acknowledge that my mortgage payments being paid at 4.5 times the standard rate for the 30-year term. A loan for for recreational trailer is financed through my credit union secured by a savings account. For a favorable rate the outstanding principal is reserved if I should default on a payment. And lastly the b.......s, report the ratio or number of revolving accounts with balances is too high. That would be one of two. My account with a major department store hasn't been used in almost two years. My VISA is extensively used. Almost 1/4 of my gross annual income goes through this account. In 2.5 years, (my easy to find information), shows one month, one in thirty, that I did not pay my balance in full. I paid less than $15 in interest in 2011. For this kind of financial history Equifax reported a score of 720. far from a bad number, but when considered by Citibank I was approved for a credit card with an APR of 25.99%. That is all of 1% lower than the highest rate in the credit range established by Citibank. When the reporting agencies conspire with the banks to suck the blood from working people how can the host of Marketplace decry the fact that consumers aren't spending enough to grow the economy. Thats a DUH!!! We are four years into a banking crisis caused by the banks and perpetuated by the banks. Isn't the banking industry making something like 40% of all the profit being made in this nation?Its way past time for banks to be broken apart. Its time that that they end their corrupt practices, and conduct their business in pure undiluted sunlight.
I was impressed with the candid statement that no one knows how credit scores are determined. However they are scored, I do know that Fair Issaac's name for their scoring system is extremely appropriate. When scene through the eyes of an Italian familiar with street language, "FICO" translates as the first person singular declarative of an Anglo Saxon gutteral for sexual intercourse.
"Bill Sermons: It’s really just a black box."
To a growing cadre of people, almost everything of economic significance in the US seems to operate in a black box - political donations, corporate filings, bank interest rates, Mitt's taxes. It's a black box world after all. One is nearly forced to conclude that media "coverage" is either an accomplice to motivated ignorance, or fecklessly superfluous. What do you think?
I agree that we consumers should take advantage of free credit reports. However, it is very difficulty to find a legitimate website. I thought I had successfully requested reports and never received them. Fortunately, nothing bad happened either. Any help on how to access free credit report, would be greatly appreciated.
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