By Peter Wagner
Star-Bulletin
Bankers bank on them. So do landlords, mortgage lenders, department stores, insurance companies, car dealerships, video stores, employers and others curious about your credit history.Credit reports -- records of your loans, payments and debts -- are a hot commodity. More than 600 million of them changed hands last year, generating $1.3 billion in the burgeoning "information services" industry.
Shouldn't you know what's being passed around?
Mari Frank, an Southern California attorney, found out too late.
"I was in total shock," she said after discovering someone had run up $50,000 in fraudulent charges on credit cards and other accounts in her name. "I didn't know what to do, and I'm an attorney."
Frank, who lives in Laguna Niguel, never suspected a woman in Ventura was living off her credit and accepting pre-approved cards as fast as they came in the mail. Not until she got a call from a creditor about an unpaid $11,000 balance did it occur to check her credit report.
After a harrowing year of bill collectors and endless correspondence to clear the record, Frank has some advice: "Get your credit report every six months."
Many agree it's the only way to know if something is amiss that could cost you a mortgage, a job, or your name.
"I think people at least once a year should look at their credit report," said Steve Rhode, president of Debt Counselors of America, a Maryland-based nonprofit organization that helps people get out of debt. "It's like taking a look at your bank statement. It's not that there's necessarily something wrong, but it's better to take a look than wait and get a surprise."
Rhode notes a friend has been trying to clear his record for 15 years because he and his father have the same name.
With little uniformity among the big "information service" firms that crank out credit reports by the millions each day, there's plenty of room for error or fraud.
Trans Union Corp., one of the three largest credit reporting companies, handles 1,400 calls a day from victims of credit fraud across the country -- a huge increase from 300 a month in 1992. Industrywide, creditors are thought to be losing at least $200 billion a year to credit fraud, according to spokesman Dave Van de Walle.
Credit reports, an industry tool, were never meant for individual consumers. Only recently have laws required that codes and jargon be translated for general use.
Three huge companies -- Experian Corporation, Equifax Inc., and Trans Union Corporation -- dominate the industry, gathering huge volumes of data provided by creditors. The reports are sold back on a volume basis to banks, stores, credit card companies -- anyone with a "legitimate business need" under the federal Fair Credit Reporting Act.
Experian moves about a million credit reports a day, the vast majority to businesses. Rates range from about 75 cents per copy to $4 or more, depending on the number of reports ordered. Individual consumers can get copies of their reports from any of the three bureaus at $8 a copy -- the maximum allowable under federal law. But getting a good look at your credit picture will cost you more.
Consumer advocates recommend you get copies of all three reports -- or a compiled version offered by a fourth company, First American Credco, for $30.95. Individual reports can be incomplete, they say, because creditors submit data voluntarily and sometimes deal with just one of the reporting companies. That could mean one of your accounts shows up only at Experian while another goes to Equifax.
Industry officials admit mistakes -- the mismatching of names, typographical errors and other slips sometimes turn a good credit report into a bad one. But tales of woe are relatively few, they say, considering the high volume of credit reports generated.
They note that toll-free numbers are available to correct mistakes and suggest people check them regularly.
"It's a fairly invisible service that has actually been to the benefit of consumers because it speeds approvals of loans and other transactions," said Maxine Sweet, vice president of consumer education at Experian.
But Frank, still smarting from her experience, directs most of her anger at the credit industry. She says her thief had little problem obtaining a copy of her credit report to steal her identity. And credit card companies were all too anxious to approve the fraudulent accounts.
"I don't blame her (the thief) even a quarter as much as I blame the credit grantors and credit reporting agencies," Frank said. "Their lax policies make this the easiest crime in America. Why should you buy a gun and hold up a bank for $50,000 when all you have to do is get somebody's social security number?"
Martin Abrams, vice president of information policy at Experian, said credit reports help businesses make quicker, better decisions.
"Information is a tool, just like any other tool," he said. "We all have fears that it's going to be misused. But in most cases, it's used in a way that creates greater wealth for our society."
But consumer groups are alarmed by the growing market for personal information.
"Private companies have control of information that affects a consumer's financial future and consumers have very little control over the accuracy or use of that information," said Ed Mierzwinski, program director at US Public Interest Research Group, a Washington D.C.-based consumer advocacy group. "Unless consumers seize control by checking their reports for errors and privacy invasions, the weak credit laws will only result in businesses selling more information without our permission, thieves illegally using information from our credit reports and consumers being denied benefits they deserved."
Abrams says credit information pertains to consumers, but doesn't really belong to them. Moreover, he said, electronic data is the way of the future. "We're becoming more and more of a data-driven society," said Abrams. "That's because we're more and more of a service economy and the two go hand in hand."
Consumer groups, meanwhile, have been pushing to strengthen the federal Fair Credit Reporting Act to require at least one free report per year to anyone on request. Also sought is a permission before others can look at your credit report. And the use of "header" information from credit reports to generate junk mail remains a privacy concern.
Thus far, just one state -- Vermont -- requires permission. And just a handful -- Massachusetts, Georgia, Vermont and Colorado -- demand the free report.
California, New York, and New Jersey are considering similar legislation.
Hawaii has seen no such initiatives.
While there are more than 600 credit reporting companies in the United States, most are affiliated with the "big three." The big three of credit
Equifax Inc., an Atlanta-based company with 14,000 employees around the world, reports annual revenues of more than $1.6 billion.
Trans Union Corporation, based in Chicago, has more than 300 offices in the U.S. operates on five continents.
And Experian Corporation, bought last year by British conglomerate The Great Universal Stores PLC for $1.7 billion, reportedly had $720 million in revenues last year.
Great Universal, which deals in credit data on an international scale, reports $9 billion in assets.
"The largest companies spend millions of dollars with us a year," said Maxine Sweet, vice president of consumer education at Experian.
The three companies also deal in "marketing information" -- data from credit reports that feeds "junk mail" catalogue and credit offerings.
Databases are also used to analyze real estate markets, and to locate debtors, criminals, policy holders, beneficiaries, witnesses and other missing people.
Under federal law, the secondary use of credit information -- the "header" information on credit reports that generates junk mail requires permission from the subject. But it's not easy to get off a mailout list.
First you must get a copy of your credit report to see what lists you are on. Then you may ask to be taken off the list. Your request will be honored, but only for two years.
Under the federal Fair Credit Reporting Act, anyone denied a loan or a job because of a credit report is entitled to a free copy of the report. Otherwise, it costs $8 in Hawaii and most other states. How to get a credit report
Contact the following:
Experian (Formerly TRW): Experian National Consumer Assistance Center, P.O. Box 949, Allen, TX. 75013-0949. Ph: 1-800-422-4879
If you find mistakes on your report
Source: U.S. Public Interest Research Group
