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Money Matters

A new cop on the credit reporting beat

Mitchell Hartman Jul 18, 2012
Money Matters

A new cop on the credit reporting beat

Mitchell Hartman Jul 18, 2012

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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