Monday, July 18, 2011
The Fourth Credit Bureau?
But what a lot of people don't realize is that there are many, many consumer reporting agencies outside of the Big Three. I was reminded of this recently when I read a Washington Post article entitled "Five Facts about the Fourth Bureau". At first I thought there might be a new bureau emerging (kind of like Shemp, the fourth stooge). Instead, the article lumps together all the smaller, unorthodox consumer reporting agencies as the "fourth bureau".
The other bureaus tend to cover topics that are missed by the Big Three. Some can be seen as niche market CRAs, such as the ones that collect information about rent paying history, which they then sell to potential landlords. Other types of information collected by the "fourth bureau" are payment histories regarding utilities payments, cellphone bills, magazine subscriptions and gym memberships. Some even keep up with whether consumers return their rental movies on time. Others include companies that compile investigative consumer reports and that provide criminal history type reports that can be used for background checks.
These smaller bureaus can play important roles as over 30 million U.S. consumers don't show up in the Big Three's databases. These consumers are in a credit morass, as they can not get a loan without a credit history and can not get a credit history without getting loans. But they can rent apartments, rent movies, sign up for utilities, etc. The payment histories generated by these actions can sometimes be used in place of a more traditional credit report.
But these types of payment histories can also hurt a consumer's chances of getting credit if they do not reflect a responsible payment pattern, or if they contain damaging errors, which they are apt to contain. Approximately 25% or more of the Big Three's reports contain damaging errors, so the other bureaus are likely to have a similar error rate. The good news ... even though these companies are not the "Big Three", they are still subject to the vast majority of the requirements of the Fair Credit Reporting Act, including the requirement that they provide to consumers upon request a complete report of all information in their database about the consumer and 15 U.S.C. 1681i's requirement that they reasonably investigate consumer's disputes of inaccurate information.
The down side ... to get your report from the small bureaus will cost you some money (approximately $11) since the yearly free credit report requirement only applies to the Big Three. Consumers can also get a free credit report from any CRA if they are denied credit (or suffer some other adverse action) as a result of the contents of the CRA's report.
The same rules regarding disputing errors also apply to the "fourth bureau" ... namely disputing in writing and dispute often. If that doesn't work, hire someone like me to sue for damages resulting from the errors (which usually also includes the benefit of a corrected credit report. Funny how a lawsuit will do things that a multitude of even the best dispute letters can not.) If any of you need help with the Big Three or the "fourth bureau", I'm only an e-mail away.