Your credit report is often the make-it-or-break-it element of your financial future. In most cases, it is the foundation upon which creditors decide whether to sell you a car or a house or give you a job. It may even be the basis upon which you are given certain security clearances.
However, as our Miami foreclosure lawyers have recently learned, an eight-year study by the Federal Trade Commission indicates that as many as 40 million Americans may be victims of errors. About half of those are considered significant.
You may think an honest mistake might be easy to rectify. You would be wrong. Not only that, these errors can cost you dearly.
Just like banking, credit reporting is a big business. The industry generates upwards of $4 billion annually, with three companies dominating: TransUnion, Equifax and Experian. These firms keep track of some 200 million Americans. These entities gather information on us and those with whom we do business, and then make money - a lot of it - selling that information. Buyers include not only banks but insurance companies, merchants and employers.
So these scores have a significant ripple effect on nearly every aspect of our lives. And yet, they have an error rate of 20 percent. An estimated one out of every 10 Americans is walking around with an error on their report that has served to damage their overall creditworthiness.
Of course, amid years of criticism, these firms have deflected the blame for any errors onto either merchants or banks, saying they had been given bad information.
But the attorney general's office in Ohio, which launched its own investigation into widespread reports of error, says the bulk of the blame lies with the credit agencies themselves, which often may be guilty of violations of the Credit Reporting Act.
Specifically, the federal law is clear in that if consumers believe there is a mistake, that claim should be promptly and thoroughly investigated by the agency. That isn't happening. Not only are these firms not conducting a "reasonable" investigation, per the federal law, they reportedly aren't conducting any investigation whatsoever, the state attorney general's office contends.
So the real problem is not even so much that there are errors, it's that they refuse to fix them.
It's estimated that some 8 million people file disputes with regard to their credit reports. However, most of those complaints are diverted to call centers in India, and even then, most are referred back to the reporting firm's website - which aren't specially equipped to handle complaints.
There is also an avenue to file complaints by mail, but the FTC learned most of those go absolutely nowhere.
Those that do get the problem fixed end up with cases that have dragged on for years - even in cases that involved a clear mistaken identity (something one would think would be a simple issue to solve).
There have even been multiple federal court cases in which individuals have won million-dollar judgments against these firms for clearly violating the law. However, it's easier for these firms to simply pay-out the settlements that actually make it that far than to go through and clean up their policies and procedures to make them compliant the law.
The fact is, bankruptcy and foreclosure often go hand in hand. Faulty credit reporting can be an incredibly difficult thing to shake. We can help.