Four Myths about the Credit Bureaus

They wield tremendous power over your life - as well as the lives of every other American adult who cares about their credit. But what do you actually know about the main three credit reporting agencies? Friend or foe? Fact or fiction?

Survey after survey suggests the average American knows little about the credit bureaus other than that they control their credit reports - and as a result, their purchasing power. And that's how the credit bureaus want it, argues Dr. Randy Padawer, a clinical psychologist whose research into consumer credit has been featured in Smart Money Magazine and the bestselling FICO 850 seminar for The Motley Fool.

"The three major credit bureaus truly want consumers to believe that they've each been blessed with an officially sanctioned franchise," says Padawer, who has consulted for Lexington Law, a firm whose credit repair services help consumers dispute errors and other questionable negative information from their credit reports.

The less you know about the credit bureaus, the more difficult it will be to resolve a problem when one shows up on your credit file. And odds are an error will appear. Four out of every five credit reports contain errors, and one out of every four contains errors serious enough to cause significant problems for consumers, according to research by the National Association of State Public Interest Research Groups.

Here are some credit bureau misconceptions and the real facts behind the fiction:

Fiction 1: There are only three "official" consumer reporting agencies.

Fact: Many organizations are in the business of collecting, compiling and processing credit information.

Fiction 2: The three major consumer reporting agencies are official government entities.

Fact: "There are no official bureaus," Padawer says. "While most Americans perceive their credit reports to have at least the same legal standing as their driving records, the truth is that the government had no role in establishing the for-profit companies which produce them."

Fiction 3: The big three credit bureaus all have the same credit information.

Fact: Different creditors often report to different credit bureaus. In fact, there is no law that requires them to report to any of the big three bureaus at all. Consumer reporting agencies do not share information either, so if there is an error on your report from all three agencies, correcting it with just one of them does not mean the error will come off the other two credit reports at the same time.

Fiction 4: Consumer reporting agencies will act quickly to help me fix an error or remove inaccurate negative listings from my credit report.

Fact: Federal law requires Equifax, Experian, TransUnion, and all consumer reporting agencies to complete an investigation into a consumer complaint within 30 days of when it was first made. The credit bureau may decide to keep the disputed item on the report as is, revise but not delete the information, delete the information, or deem the complaint frivolous. Given that the easiest option is to simply deem your complaint as frivolous, many consumers find that their legitimate disputes get dismissed.

Increasingly, frustrated and fed up consumers are turning to credit repair professionals like Lexington Law to help them resolve credit report problems. Anyone who has disputed an item on their credit report knows the process can be long, aggravating and perhaps without results. Involving a professional can achieve faster, better results.

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It is possible to legally fix bad credit. To learn more about disputing the negative information in your credit reports, please visit Lexington Law, the trusted leaders in credit repair.

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