Credit Issues

Credit issues

When it comes to credit, the old computer adage of “garbage in, garbage out,” is appropriate.

Credit data is a toxic waste dump, contaminated beyond belief with anything and everything that can negatively affect a consumer’s score, and the industry has managed to avoid responsibility (and keep their profit margins) by making it the consumer’s problem to correct errors and charging for obtaining actual scores.

One of the things we don’t want to do is try and reinvent the wheel. Our research told us there are already a handful of truly useful sources of information when it comes to credit issues as well as collection abuses.

Again, as we’ve pointed out, the Internet is useful but it also is crowded—and not everything you can find there is really helpful.

For those reasons, we’ve decided to provide borrowerHelp consumers with some basics and the point them toward other reliable and authoritative resources.

Credit data abuse is one of the most important factors in creating and keeping the sub-prime market going. The message from the industry is that having rapid access to information and credit scoring is a fundamental reason more and more people are able to get loans; the reality of life is that credit scoring is nothing more than a product bought by lenders that allows them to ratchet up interest rates.

The difficulties consumers face in trying to force credit information companies to correct the often deliberately-flawed data they hold and routinely report are monumental. And the costs imposed on allegedly lower-credit borrowers in artificially-inflated interest rates allows more affluent consumers to borrow at lower cost.

The legislative and regulatory landscape for credit reporting is entirely under the control of the industry, and like the mortgage servicing issue, the burden of vigilance is entirely on the consumer.

And—credit repair and “consumer credit counseling” are all-too-often simply scams. There is little or nothing they can do for you that you can’t do yourself.

Denise Richardson was one of the early voices in the mortgage-servicing abuse fight and turned her energies to the disturbing area of consumer credit reporting. A quote from her web site is an excellent overview:

“After enduring a decade of mortgage accounting errors and erroneous credit, I mistakenly thought my troubles were over. But if that were true – Give Me Back My Credit would never have been written. Just when I thought my epic 10 year battle had come to a close and my credit had been restored, I soon discovered that bogus collection accounts were reflected on my credit report. That set off another grueling five year battle to restore my credit. It wasn’t until the enormity of the problem hit me that I finally decided to tell my story of the 15 consecutive years I spent trying to reclaim and maintain my true credit identity.”

DID YOU KNOW?

$ Predatory mortgage servicers can utilize negative credit data reporting to trap borrowers by preventing them from being able to refinance at lower rates.

$ Bogus credit data and the faulty scores derived from them are used by insurers to artificially inflate premiums in many states.

$ Auto dealers steer borrowers into high-interest auto loans even though they could qualify for much lower rates, simply because they get a cut of the inflated rates.

$ Credit card companies buy knowingly flawed credit data in order to ratchet-up card interest rates and fees.

$ Credit bureaus deliberately impose delays on fixing the data they hold because corrections always raise credit scores, which costs their customers (the lenders) more money.

! Employers acquire flawed background checks that can be based on information consumers cannot see and will make hiring decisions on them without revealing why a candidate wasn’t chosen.

! The mergers of industry players have effectively eliminated any information-sharing protections that were put in place.

! There are far more data-gathering and reporting operations involved than the three major players, and information about you that goes far beyond “credit” data is routinely collected, analyzed and sold without your knowledge or approval.

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Kristy Welsh is the President and CEO of Web Nation, Inc., in Scottsdale, Arizona. Begun as a kind of Internet experiment, creditinfocenter.com has become one of the most important information sources on the web today, and Kristy has released the 2nd version of her book.

We highly recommend you review the forums—many of the consumers who find their way to them have similar experiences and circumstances, and the answers from some of the forum regulars (including Kristy) are authoritative.

<Click at left to for the forums

Click at right> for book info