This scenario reads like a fairy tale, only without the happy ending. Once upon a time, consumers could correct flawed credit reports by challenging incorrect information, thereby ensuring themselves better interest rates when obtaining new credit or a quickly approved loan. Unfortunately, this is no longer true and disputing flawed information is not a guarantee that the consumer's credit history comes through squeaky clean the next time he applies for credit.
Originally designed to protect consumers and their credit scores and allow them to obtain the best interest rates possible for their status, the Fair Credit Reporting Act gives consumers the power to dispute false information on one or more accounts listed in their credit reports. However, certain changes in the manner that mortgage giants process this information have destroyed this advantage for consumers. While we all know that bad credit is one of the biggest obstacles to refinancing or obtaining new credit, it isn't the only obstacle anymore. Plus, consumers have been led to believe that good credit should be the easiest path to refinancing. What if this isn't true any longer?
This is where the nightmare begins for some consumers. If a consumer has false information on his credit report and the information is negative, his credit rating is going to suffer. Lenders are going to offer him accounts with high interest rates or turn him down completely. Let's say that the consumer attempts to fix this false illusion of bad credit. He puts in a dispute about some account or other, has the dispute notation placed in his credit file, and wins the dispute. Instead of reaping the benefit of better interest rates, this consumer is earmarked for disappointment as his credit request is tossed back for manual underwriting, a situation that is likely to earn him an "unapproved notice" or higher interest rates than he rightly deserves.
While this certainly does not seem fair to the consumers, Fannie Mae and Freddie Mac are more than content with it. After all, they have decided to protect themselves by ferreting out every application with the potential to turn into a disappointment for the lender. After last year's fiasco with the mortgage crisis, bankruptcies, and subprime loans, the financial world just isn't up to taking a chance. There is no more "innocent until proven guilty." Therefore, consumers are getting penalized for performing the responsible act of disputing flawed reports.
This kind of action is reminiscent of school days when the entire class is punished because a few children misbehaved. The good get punished with the bad. Disputing credit reports can now harm your chances of approval for refinancing. This is simply one of those cases of losing if you do not try and losing if you do. Maybe it is time to protect the consumer again. After all, it is still our data, our reputation and our money...isn't it?
Originally designed to protect consumers and their credit scores and allow them to obtain the best interest rates possible for their status, the Fair Credit Reporting Act gives consumers the power to dispute false information on one or more accounts listed in their credit reports. However, certain changes in the manner that mortgage giants process this information have destroyed this advantage for consumers. While we all know that bad credit is one of the biggest obstacles to refinancing or obtaining new credit, it isn't the only obstacle anymore. Plus, consumers have been led to believe that good credit should be the easiest path to refinancing. What if this isn't true any longer?
This is where the nightmare begins for some consumers. If a consumer has false information on his credit report and the information is negative, his credit rating is going to suffer. Lenders are going to offer him accounts with high interest rates or turn him down completely. Let's say that the consumer attempts to fix this false illusion of bad credit. He puts in a dispute about some account or other, has the dispute notation placed in his credit file, and wins the dispute. Instead of reaping the benefit of better interest rates, this consumer is earmarked for disappointment as his credit request is tossed back for manual underwriting, a situation that is likely to earn him an "unapproved notice" or higher interest rates than he rightly deserves.
While this certainly does not seem fair to the consumers, Fannie Mae and Freddie Mac are more than content with it. After all, they have decided to protect themselves by ferreting out every application with the potential to turn into a disappointment for the lender. After last year's fiasco with the mortgage crisis, bankruptcies, and subprime loans, the financial world just isn't up to taking a chance. There is no more "innocent until proven guilty." Therefore, consumers are getting penalized for performing the responsible act of disputing flawed reports.
This kind of action is reminiscent of school days when the entire class is punished because a few children misbehaved. The good get punished with the bad. Disputing credit reports can now harm your chances of approval for refinancing. This is simply one of those cases of losing if you do not try and losing if you do. Maybe it is time to protect the consumer again. After all, it is still our data, our reputation and our money...isn't it?
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Denise-
I am so disgusted with the credit agencies. We have worked hard and diligently to build our credit back up despite SEVERAL misreported medical bills owed by Work Comp and not us. Although we get appology letters and the bills removed (eventually) - how do we get those points back???
In addition, we were 2 days from going to the bank and FINALLY getting a home loan and HSBC Best Buy sold our account to Capital One. Without consent, CO ran a credit check which dropped our score by 38 points!!! So, now, no dream home for me, as someone else now has their offer in. I'm so disgusted. We have been in contact with Transunion and HSBC. How do we get our points back - we are now set back 6-10 months to rebuild. We had to pay our car off so that closes a line of credit (which hurts us too)What's the point of doing all the right things here? Also the score we buy online is 83 points higher than what the bank score is. How is this legal? Is it time to write my congressman? These agencies need to be governed and the people need to be protected! Sick, disgusted, and all cried out. HELP!
Hi Amy --Unfortunately, I hear this a lot lately. Consumer credit ratings have been negatively impacted --due to any number of reasons. Once your credit is dinged-- it can be very time intensive trying to correct. When this happens because of someone else's actions --or inactions, including fraud or inaccurate creditor reporting, it's even more frustrating!
Have you reviewed your credit reports? Disputed the erroneous info? If not, you should. You are entitled to a no-cost (really free) credit report from each of the three big credit bureaus. To find out how to order them see:
http://www.givemebackmycredit.com/richardson_credit_reports.htm
When you get the free reports, review them and then dispute anything that's inacurate. See:
http://www.givemebackmycredit.com/richardson_howto_dispute.htm
Each of the credit bureaus will investigate your disputes, and review any copies of proof/documentation that you submit with the dispute form that will come with the credit reports. Then they will get back to you with their findings --and if they accept your claims, they will correct the erroneous info and send you clean reports.
At that point, depending on the results of their investigation and whether or not any inacuracies were corrected, or not, you will know whether or not you need to take additional steps, including whether you should consult with a consumer attorney over any potential Fair Credit Reporting Act violations.
If you opt to consult with a consumer attorney, one place I can suggest looking is on the National Association of Consumer Advocates site.: http://naca.net --click on find an attorney tab at the top of the page, then insert your city and state and find someone in your area.
For additional info --and guidance, you might also want to reach out to the Consumer Financial Protection Bureau at http://www.consumerfinance.gov --you can find a phone number on their site as well.
Thanks for taking time to share your situation --keep us posted.
Denise