The problem with credit reporting

To the editor:

I hope a number of New Ulm residents had the opportunity to view CBS’ 60 Minutes show Sunday night. That’s because CBS had a report on a recent investigation of the Big Three credit-reporting firms operating in the United States by the Federal Trade Commission, and it was pretty scary.

The FTCs Chairman drew a pretty ugly picture of how these firms operate within the United States. In the first place, while they are American operations, all the credit-analyzing work of the three firms is done in India so as to put their actual operations beyond American law, he told CBS.

That meant, he said, that all the credit-analyzing work was done by Indians who mostly did not speak or understand English. So, as a result, the FTC investigators found that numerous mistakes and misinterpretations were being made in individuals’ credit ratings.

The FTC also found that although there was a time limit on how long a negative entry stayed on an individual’s credit rating it wasn’t unusual to find that those entries were two or three years old. The end result, he said, was that all three firms were “operating fraudulently and indifferently” in carrying out the job of creating an individual’s credit rating.

When asked by the interviewer what his feelings were about what was found in the FTC investigation, he said he felt “very sad” that there will be “hundreds of thousands” of individuals here in the U.S. that will be punished by having low credit ratings that they don’t deserve, and “there’s nothing we can do about it.”

While I’m not a lawyer, I feel that I know enough law to be able to say there is something that can be done to prevent that from happening. As the lenders subscribe to these firms in order to get their credit-rating services, I feel that is the same legally as hiring the particular firm to handle the credit-checking tasks for that particular lender. Therefore, I believe that makes that lender culpable for the actions of the credit-rating service.

Therefore, as the lender now knows, as a result of the FTC investigation, that the credit-rating service the lender has “hired” is conducting a “fraudulent” credit-rating service, that makes the lender culpable, as well, in my book. That, then, opens the door for the affected borrower who is seeking a loan and is turned down because of a “low” credit score to sue the lender as the lender cannot guarantee that the borrower’s credit score is that low or even that it is that borrower’s credit score.

I should also note that lenders can’t even guarantee that the “outstanding unpaid bills” that may have been noted in lowering the individual’s credit “score” are valid bills to be paid. For example. Nancy and I went through a situation with Sprint last year. Even though Nancy had been a long-time customer and the FCC was investigating the firm’s billing practices. Sprint’s billings for April, May, June, August and September last year were hellacious to put it mildly. The billing for each of those months was nearly double the normal monthly rate of $116.

When I complained to Sprint about the additional charges in those spring months, I was told that it was ail the texting Nancy was doing on her phone that was causing the big increase in the billing. However, she was doing very little texting at that time. Then, in July, an amazing happened as someone in the billing department must have felt sorry for us, as the bill was for the $116 the way it should have been.

Then came the August and September bills, and they were as high if not higher than the spring ones. So, once again I called to complain and again was told it was Nancy’s fault because she was talking too much on the phone. So, that was the end as we switched to Verizon at the end of September, and as I had figured out that we had paid enough in overcharges the past spring to cover what the normal charges would have been for those two months, I refused to pay the August and September Sprint billings.

Sprint did continue to bill for several months, but then it seemed to lose interest as I thought was wise. However, Nancy learned recently that Sprint’s bogus August and September billings are on her credit report, lowering her “score” significantly. I can’t believe Sprint did that because she now has been harmed by Sprint’s phony billing action so we can go forward with filing a complaint with the FCC.

As many individuals who have significant resources but do not use credit cards are being denied loans by the lenders, and we now know that these credit scores aren’t at all reliable, it’s time for lenders to go back to the good, old days when they made the decision based upon the character and resources of the applicants. That’s the right way.

Ronald L.W. Larsen

New Ulm

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