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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