Are Credit Reference Agencies what they seem to be?

The big two credit reference agencies in the world are Experian (founded only in 1996) and Equifax (founded in 1899). On the surface if you look at their websites, they try to come across as upfront businesses that simply store and report factual information about people and their credit history. I did look into this a little and on the surface (in the UK) they apparently always store a person's credit history for the previous 6 years. In the US, I think it might be 10 years.

So this got me thinking how did only these two companies get to hold so much power? How did they get to have a monopoly on that particular 'industry'? I was surprised that one of the companies that Experian now owns used to be owned by BAIN CAPITAL. For people who don't know, Bain Capital was co founded by Multi millionaire / Billionaire Mitt Romney, who unsuccessfully ran for president in 2012. This could indicate that there would have been a lot of political dirty tricks involved in getting the company off the ground in the first place. Though this is just a guess. I didn't get the chance to read up much on the history of Equifax though as I understand it there is some published bull# about it being founded by two brothers who were greengrocers.

Anyway, the power that these companies hold is absolutely breathtaking. Suppose that they were not as impartial as they would have us believe. Suppose that they didn't only report 'factual' information, but upon instruction from some powerful third party, they reported damning information that would scupper any chances of someone getting that business loan or mortgage. For example, suppose I was running a company devoted to finding green energy solutions but I was being monitored carefully by GCHQ and the establishment. Now suppose I desperately needed a bank loan of £20,000 to keep my company afloat. My business had a good credit history - no defaults or late payments in the last 6 years. Now suppose that when I apply for that bank loan GCHQ automatically get notified and their agents direct the credit reference agencies to place a black mark on my file so when the bank checks I don't get the loan and the business goes bust. My point is, who is to say that stuff like this - abuse of power like this - is not happening right now?

I just wanted to hear other peoples thoughts on this issue.

a reply to: decltype

You wrote:

"I was surprised that one of the companies that Experian now owns used to be owned by BAIN CAPITAL. For people who don't know, Bain Capital was co founded by Multi millionaire / Billionaire Mitt Romney, who unsuccessfully ran for president in 2012. This could indicate that there would have been a lot of political dirty tricks involved in getting the company off the ground in the first place."

Would you care to elaborate on your chain of thoughts and facts to substantiate this reasoning?

a reply to: decltype

Well, in the U.S. at least, you have a right to see your credit report from all the credit agencies once a year for free. Also, if you are rejected for a loan or job because of a credit report, you are allowed to get a copy of your report for free. Since you're able to monitor your credit reports yearly and at times of rejection, you would be able to see what has been reported about your credit.

I think in your scenario you would more likely be rejected by the originator of the loan, the bank, for reasons other than the credit report. Banks don't simply issue loans based merely on a credit report, no matter how glowing it is. There are a lot of other considerations.

a reply to: decltype

www.freeidentitytheft.com*

*This is not an actual site, please don't go there.

a reply to: Toromos

In the UK you have to pay to see your credit report and loans and bank accounts are based purely on credit reports.

a reply to: decltype

too much power in the hands of any group will eventually bring this kind of crime to the fore. One day the system will fall apart because one man will end up the winner and own the whole world and everything and every body in it.

then there will be a revolution and the whole cycle will start all over again from the bottom.

I wouldn't be surprised if there are whole other layers to Credit Reference Agencies, than what they actually want us to know.

I read that these Credit agencies are not supposed to discriminate based on age, yet the credit agencies use the length of somebody's credit to raise their credit rating - something that obviously directly influences older people (the longer someone's been alive, the longer the length of their credit will be!) According to statistics, listed on many websites (from Debt Solution, to NYTimes) suggest that credit ratings also seem to differ between races, suggesting discrimination on that basis too.

I'm also uncomfortable with the fact that we are told we have to pay for OUR information and history. This is our data, and I believe it should be transparent and accessible to us, not just to credit agencies and banks.

Here is an interesting quote from the Official Blog of Debt Solution:

Credit agencies are in the business of collecting and selling our personal data for a profit without compensating us. According to the CFPB (Consumer Financial Protection Bureau) the consequences of errors in a consumers report can be catastrophic for a consumer, shutting him or her out of credit markets, jeopardizing employment and new employment opportunities or significantly increasing the cost of housing and interest rates.

Another little known revenue source that all 3 major credit reporting agencies make 100’s of millions of dollars per year is memberships to businesses allowing them to check your credit and put information on your report. The problem with that is they don’t ask the credit or debt collection agency if the information is accurate.

Another interesting quote by Corey P Smith, author of Conspiracy of Credit:

The biggest misconception about credit is that it’s a good thing. Credit is for poor people and a financial strategy created by the wealthy to create debt. The problem with that is most poor people do not know how to leverage debt.

a reply to: decltype

That doesn't make sense. You can dispute factual information on the credit report.

It would be easier to 'make a call' to the bank, which is heavily government regulated, directly. They have their own models in addition to the items on the credit report, and they don't have to disclose any reasons why people are denied.

But denying somebody a loan is a pretty lousy way of exerting serious pressure. Governments don't give a crap about small time stuff like that. If they want to make at threat, they'll put you on the anonymous no-fly list, or find child porn on your hard drive.