Contact Credit Bureau

Every day U.S. credit bureaus exchange billions of pieces of consumer information. By sorting through vast electronic files, subscribers such as banks, stores and employers make decisions that affect the lives of millions of individuals. Consumers themselves, whose personal histories comprise the raw resources of this $1 billion industry, are finding it difficult to obtain, challenge and even understand what is being said about them.

The result, consumer advocates say, is a growing pool of credit information that is outdated or just plain wrong. Many of the advocates say the problem with the industry is structural: The laws and operating procedures that govern current credit-reporting practices were developed more than 20 years ago, when the first commercially available mainframe computer catalyzed a major growth spurt in the industry. Further, because creditors, not consumers, pay the bureaus for their services, sensitive consumer data is left in the hands of businesses that lack any economic incentive to adequately police their own behavior. "Bear in mind the allegiances of the credit-reporting agency," said Irene Freeman, president of Consumer Credit Counseling Services of San Diego and Imperial Counties, a non-profit consumer education organization.

"Their responsibility is not to John Q. Public, but to the company who is lending money or resources and paying for the credit information." Compounding the problem is the fact that none of the parties in the credit-reporting cycle is really held responsible for errors. The law protects credit bureaus and information-providers from liability for "honest mistakes." Moreover, most of the mistakes are made not by the bureaus themselves, but by the businesses that supply the information: lenders, retailers and landlords.

These users of the credit system are not even mentioned in most of the laws governing credit reporting. "One of the biggest battles we are fighting in the current federal legislation is to get credit grantors held responsible for the information they report," said Gerri Detweiler, education coordinator for Bankcard Holders of America, a credit advocacy group based in Washington. "So often it is the grantor which refuses to correct mistakes.

Until we get them involved and contact credit bureau, very few of these issues will get resolved." Usually when a consumer complains of an inaccuracy in a credit report, the credit bureau asks whatever company supplied the information to investigate it.

If there is no response, the law requires the credit bureau to remove the disputed item from the credit file. However, if the company that gave the information to the credit bureau does not remove it from its own files, the item is likely to show up again next month when the company transmits its next batch of electronic files. In fact, credit-reporting agencies may actually be rewarded for providing erroneous information, because clients such as banks and retailers often prefer to get the longest reports they can, even if derogatory information is contained in them. Ralph Spurgin, chief credit executive with The Limited clothing store chain, was recently quoted by the Wall Street Journal as saying that comprehensive reports with errors in them could actually be more valuable to creditors than smaller reports containing only correct information.