A Good Overview of Problems and Developments in Credit Reporting
The American Banker recently published a good and informative article with an overview of problems and recent developments in the credit reporting industry. There’s nothing new in the article, but it’s a good read for talking points. I particularly liked the description of the FCRA “dispute process as a virtual merry-go-round of frustration.”
The article also notes the tension that exists between the need for more accurate information and credit monitoring, which has become a huge profit center for consumer reporting agencies (“CRAs”). This tension, as explained in the article:
“The credit reporting agencies are set up to profit from their own inaccurate information,” said Leonard Bennett, a founding partner at Consumer Litigation Associates, who specializes in credit reporting cases. “They market their companies as if the bureau systems are objective, neutral libraries of information. But these are private businesses engaged in making money and selling a product — they are not government agencies.”
In other words, the CRA’s profit from their own mistakes.
Also of interest is the article’s emphasis on the problem with furnishers of credit information. The article notes that increasing pressure on and oversight of furnishers could result in furnishers pulling out of credit reporting all together:
It’s not clear that’s a viable option, however, because the entire credit reporting system falls apart if the data supply begins to resemble Swiss cheese. Regulators have also grown increasingly worried about those with thin or nonexistent records, and firms looking to scale back or quash their furnishing duties could, in a roundabout way, find themselves exacerbating the problem.
The article is a good read and worth your time if you’re interested in credit reporting issues. Check it out here.