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Credit Repair News

1/9/2010
Credit Bureaus Wouldn't Cut It On 'CSI'

Ever wonder how credit reporting companies like Equifax dig up dirt on overextended consumers? In many cases the credit bureaus don't do their own legwork--they pay public records vendors to do it for them.

These hired sleuths troll through records rooms in local courthouses in search of financial judgments against delinquent consumers and homeowners. Whatever evidence they find is passed along to the credit bureau, which adds the details to the person's file, potentially sinking his or her chances for a mortgage, a car loan or even a job.

But those research outfits don't exactly employ CSI-grade personal identification techniques. So, for example, if there's more than one person with the same name in a particular municipality, a negative credit event can end up in the wrong consumer's file.

Equifax is now facing federal class action lawsuits in New Jersey and Pennsylvania over claims files were mistakenly tagged with negative info. One suit is set to go to trial in a Philadelphia federal courthouse this spring.

"There may be thousands of consumers who are denied credit or denied a job because of one of these mistakes,'' says Ed Mierzwinski, director of the consumer program at the U.S. Public Interest Research Group. But, he adds, most of these unfortunate folks aren't represented by attorneys and can find it difficult to get the credit bureaus to correct their records. Says Mierzwinski: "The credit bureaus' routine answer is, 'It's not our fault if the public record wasn't accurate.'"

The plaintiffs in the pending actions against Equifax claim the company violated the federal Fair Credit Reporting Act by failing to fully investigate complaints that it had mistakenly assigned them negative credit events. In both cases, Equifax is said to have trusted its public records vendor whenever it was accused of getting something wrong--instead of double-checking the info on its own.

Lewis Perling, a defense attorney for the Atlanta-based credit bureau, declined to comment on the litigation. But in court papers, Equifax insists it "maintained reasonable procedures to ensure maximum accuracy in its credit reports" and that any harm that might have been suffered by the plaintiffs wasn't the company's fault.

That's not the way Bruce A. Summerfield of Blackwood, N.J., sees it. He was surprised to learn in 2007 that Equifax was reporting he hadn't paid $1,075 owed to AT&T. What Equifax's investigation system had missed was that the real debtor was the retired machinist's son, Bruce R. Summerfield, who shared his father's address but was serving in the military in Iraq. Equifax's public records vendor at the time, ChoicePoint, had failed to make that distinction when it discovered a judgment against "Bruce Summerfield" in a Camden County, N.J., courthouse.

After the elder Summerfield contacted Equifax about the discrepancy, Equifax asked ChoicePoint to investigate and ChoicePoint responded that, according to its records, the $1,075 judgment was valid. Equifax relayed that information to Summerfield, although it didn't name ChoicePoint as the source of its information, or provide him with a copy of the original judgment record. Instead, Equifax provided Summerfield with the address of a Camden County municipal building where he could supposedly check the records for himself. (As it happened, Equifax directed Summerfield to the wrong county building.)

Credit reporting mistakes can also occur when public records vendors don't supply updated information. Several years ago, would-be creditors filed an involuntary bankruptcy against Richard Chakejian of Chester Springs, Pa., after a business deal he was involved in went sour. Chakejian fought the bankruptcy action. In May 2006, a bankruptcy judge ruled in his favor and ordered that the filing not adversely affect future credit reports on Chakejian. But in 2007 Equifax was still reporting that Chakejian was the subject of an involuntary bankruptcy. He's now the lead plaintiff in the Pennsylvania class action suit against Equifax.

Philadelphia attorney John Soumilas, who's representing the plaintiffs in both pending suits against Equifax, says there are at least 20,000 consumers in New Jersey and Pennsylvania who disputed a credit report and got the same misleading boilerplate responses from Equifax.

What can you do if you're turned down for credit and suspect there's bad information in your report? Ask to see the full report, and find out which credit bureau generated it. If you spot any spurious information, demand that the credit bureau investigate and correct it. Should you happen to get the run-around, you may just have to troop down to the courthouse and play detective yourself--or join a class action suit.

By: Asher Hawkins from Forbes.com
 
 


 
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