There exists an argument over the ethics of disputing credit information contained within the credit bureaus, especially if the information is valid. We abide in an altruistically capitalist society and the credit bureaus capitalize on consumer information. Unlike our legal system, the bureaus take no oath to truth, equity and the common good. No American has the moral obligation to support any business venture or corporation, much less a corporation which may well hamstring their ability to recover from a financial downturn. The information tended by the credit bureaus is ultimately for sale to the highest bidder.
The credit bureaus would maintain every piece of credit information forever if it weren't for Federal law which has directed them to remove most items after seven years. In essence, the credit bureaus themselves practice credit repair, basically at the seven year mark. However; many derogatory items may remain for much longer if not monitored. If it is right to remove accurate credit accounts after seven years, why would it be wrong to do so in less time?
In relationship to the consumer, the credit bureaus do not concern themselves with the impact of the information. This information often misrepresents the credit worthiness of the consumer. By tagging good citizens as "deadbeats" the bureaus damage the creditors, the economy and, most importantly, the individual. Several policies and techniques employed by the credit bureaus appear most abusive to the American consumer. In fact it is important to remember that the consumer is not the client of the bureau at all.
Seven years (10 years for bankruptcy and some court accounts) credit bondage punishes the debtor unjustly. The seven year mark is entirely arbitrary and new studies have shown that the statistical analysis used by the bureaus renders most derogatory credit ineffectual after two years. Within a year or two, most consumers completely recover from an economic crisis. For the remaining five or six years, the remaining derogatory data subjects the consumer to consistent scrutiny for past events that may no longer be relevant and in most cases is long forgotten by the creditor. By expelling the consumer from the credit loop, the economy suffers, consumers fully recovered from, crises, returned to financial responsibility are anxious to reenter the credit economy.
Credit Bureaus are not immune from making mistakes, however; the difference is their acknowledgment of such mistakes. The Bureaus report an error ratio of less than 1 percent which differs greatly from independent studies that put that score at nearly 40 percent. One of the worst kind of errors made by credit bureaus is a file merger where the credit of one person with a similar name is spread onto the file of another innocent party. But getting a simple error like that corrected can prove to be a monumental undertaking, with the Bureaus almost deaf to requests for verification and with the ultimate burden of proof resting on the violated individual.
As a reminder, the consumer is not the real client in this cycle. The databases really pay off in the sales of information. Ever wonder why you end up getting dozens of calls and maybe hundreds of pieces of junk mail the minute you apply for a loan? It’s called “trigger data” and creditors are willing to pay dearly for your information and to be informed when you are looking for financing. Further, creditors routinely run checks or buy lists from the Bureaus for information on persons with high debt, low debt, no debt and bad debt. This enables them to target you for credit repair services, debt consolidation/settlement/counseling services, and to enable other existing creditors to penalize you for any late you may have on an unrelated account. The end loser is the consumer who values his privacy. The horror stories keep coming about individuals whose jobs have been lost, insurance cancelled, reputation ruined by sloppy collection and dissemination of personal information. This does not include the mass irritation experienced by consumers forced to wade through the reams of junk mail. Privacy is a thing of the past, and the blame can be firmly placed on the credit bureaus.
