Never assume that your personal or business credit is accurate. These reports are often plagued with errors and inconsistencies, which can affect your overall credit rating and, ultimately, the rates you pay on your loans, costing you money. A bad credit rating can also prevent you from getting the loans your business may desperately need to grow.
The power the big three credit reporting agencies -- Experian, Equifax and TransUnion -- have over your personal and business life is potentially disastrous. Will you miss out on your dream house because an error on your credit report delayed your financing? Will an error on your business credit report cause you to pay higher interest rates than you should and cut into your cash flow as a result?
These agencies need to be held to a much higher standard than they are currently, especially considering their past actions. In 2000, the Federal Trade Commission fined the three agencies a combined $2.5 million because they weren't complying with provisions in the Fair Credit Reporting Act, namely the requirement that they maintain a toll-free number to allow consumers to challenge mistakes on their credit reports.
Equifax and TransUnion were even accused of blocking certain calls based on area code.
If you want to see your report, you have the privilege of paying the companies around $10 just to see what they have reported about you before you can even start correcting the problem. A new law requires that by Sept. 1, 2005, everyone will be entitled to one free credit report annually, which is a step in the right direction, but not enough.
The credit reporting agencies take a guilty-until-proven-innocent approach with consumers and businesses, and that's unacceptable. The burden of proof should be on them to prove a negative remark before it's ever posted to your report. You shouldn't have make sure the information they built their business on and profit from is accurate -- that's their job, not ours.
In a country built on capitalism, credit reports wield a great deal of power. Those who profit from generating those reports should be held more responsible for making sure everything in them is 100 percent accurate. There is too much at stake to expect anything less.
If you would like to see action taken on this cause so that laws are changed, please contact us.