Credit Bureaus: Why Biden Should Cancel 3 Major Credit Bureaus?
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Let’s look at what the credit bureaus do and what they can change in this Q and A.
What are the 4 credit bureaus?
Most U.S. consumer credit information is collected and kept by the four national traditional consumer reporting agencies: Experian (formerly TRW Information Systems & Services and the CCN Group), Equifax, TransUnion, and Innovis (which was purchased from First Data Corporation in 1999 by CBC Companies).
Which credit bureau is most used?
Among all the credit score models, the FICO credit score is used by more than 90% of major U.S. lenders. You might have a different score calculated by a different scoring model with a different provider.
Can we have new credit bureaus?
Actually, if President Biden has his way, he will create a public credit reporting agency (CRA) to compete with the three major credit bureaus and maybe one day replace them altogether.
The push for a public credit reporting agency is part of President Biden’s job and economic recovery agenda. The president’s agenda is inspired by a proposal from Dēmos, a liberal think tank with offices in New York and Washington, D.C. It calls for the formation of a new, national credit reporting and scoring division inside the Consumer Financial Protection Bureau (CFPB).
Where’s the problem within the 3 major credit bureaus?
Unfortunately, racist policies like redlining shut Black and other minority families out of the opportunity to use government-backed mortgages to purchase homes. Such policies contributed to the racial wealth gap that still exists in the U.S. today. According to the Federal Reserve, Black and Hispanic families hold less than 15% of the wealth of white families, on average.
Adding to that, many studies indeed show that Black and Latino consumers (as a group) have lower credit scores than their white and Asian counterparts. A CFPB study from 2015 found that those same Black and Latino consumer groups are also more likely to have no credit scores at all—known as being credit invisible.
“…Black and Latinx borrowers [are] more likely to be denied credit than white borrowers and more likely to be charged higher interest rates on everything from home mortgage loans, to credit cards, to car loans,” Traub said. “It’s just one of many ways the financial deck is stacked against Black and brown consumers.”
Will the new credit bureaus allow me easier access to correct my credit file?
The Dēmos proposal calls for a public CRA that’s more transparent, consumer-friendly and puts power into the consumer’s hands. Yet sponsors of the federal CRA idea can’t explain how it would actually work.
“The proposals for a public credit bureau option all suggest they’re going to eliminate any and all alleged problems regarding bias or accuracy,” said John Ulzheimer, nationally recognized credit expert formerly of FICO and Equifax. “But none of them explain in any detail how they plan on doing so. The question of ‘how’ is never addressed.”
Michael A Turner, Ph.D, President and CEO of PERC (Policy and Economic Research Council), echoed these concerns.
“…supporters of the public credit bureau approach, while well intentioned, are wafer thin on details,” Turner said. “These groups are overwhelmingly lawyers who have no experience as lenders/practitioners and who therefore do not benefit from the wisdom of experience.”
Credit Errors Will Still Exist
There’s no indication that the CFPB would be any better at maintaining error-free credit reports on some 220 million consumers than Equifax, TransUnion, and Experian. Why? Because most credit reporting errors aren’t caused by the credit bureaus themselves.
“The problem of credit reports really doesn’t have very much to do with the credit bureaus. The problem of credit reports has to do with the 15,000 companies that send them information every single month,” Ulzheimer said.
The credit bureaus are warehouses of information that they receive from data furnishers like banks, credit card issuers and collection agencies. “If you swap out Equifax, TransUnion and Experian for some government run warehouse, you’re not eliminating the errors,” Ulzheimer said. “You’re just changing the warehouse.”
How do I contact the three major credit bureaus?
Credit Bureau Contact Information
- Equifax. Equifax.com/personal/credit-report-services. 800-685-1111.
- Experian. Experian.com/help. 888-EXPERIAN (888-397-3742)
- Transunion. TransUnion.com/credit-help. 888-909-8872.
How do I talk to a real person at the credit bureaus?
Talk to a Real Person at Experian
Call 888-397-3742 if you want to order a credit report or if you have any questions related to fraud and identity theft. The number 888-397-3742-6 (1-888-EXPERIAN) will also work. You can place an immediate fraud/security alert on your credit with this number.
What is the new credit score system?
FICO is launching a new scoring model this summer, called the FICO Score 10. The new model will take into account a consumer’s account balances and missed payments over the last two years. About 40 million consumers will see their scores drop as a result.
It’s time to your power back and fight the credit bureaus, when it comes to the inaccuracies on your credit report.
If you need help with dealing with the credit bureaus reach out to 3waycredit.com.
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