A Simple Kind Of Life
Risks To Your Credit Rating
This week I got a notice in the mail telling me that a lien had been filed against me for non-payment of state taxes. Turns out the Maryland comptroller never cashed the check I sent in 2007, and in three years' time, no one had called me to clear up the problem or sent me any notice prior to the lien — yet that court filing is probably going to go on my credit report (this is part of why we now domicile in a place WITHOUT state income tax.) What a flipping joke!
Things You Control And Things You Don't
The worst part about this is that I have absolutely no legal recourse thanks to the ridiculously ineffectual method of tracking creditworthiness that we've developed in this country. Allow me to share another personal story of credit stupidity to illustrate. I was in a car accident in college that sent me to the ER, and my auto insurance paid all my medical expenses — or so I thought. Apparently, the radiologist failed to file with my insurance, and also failed to ever send me a bill. No call, no letter. I lived two blocks from the hospital, for Christ's sake — someone could have come over and knocked on my door! Then, a year or so later, Matt and I were applying for our first apartment together. The manager said, “Your husband's credit is impeccable, but you've got an outstanding medical debt on yours.” I was livid. I called the hospital billing office and flew into a rage, asking why they hadn't contacted me before putting this on my credit (this was my first experience with “corporate unfairness,” and I was full of youthful righteous indignation!) The sour-sounding woman on the other end of the line informed me quite matter-of-factly that they were under no legal obligation to contact me at all before messing with my credit.
Of course, thanks to the Fair Credit Reporting Act (FCRA), you can have erroneous items removed from your credit report. However, a company's failure to notify you of a debt is not just cause for removal from your report (the best you can do is attach a note explaining why you feel your credit has been unfairly damaged by the actions of others.) But the entire burden for making sure that your credit report is accurate is up to you. You have to pull your report to see that there is a mistake, you have to file a complaint with each of the three major credit bureaus, you have to provide the necessary documentation to correct the problem, and you have to stay on everyone's asses to see that your report is updated. It's also your job to see that good credit is actually included on your report — companies have no legal responsibility for reporting information about accounts in good standing that would raise your credit score, either. Nice!
They're Not On Your Side
So here we have a system that can negatively impact just about everything you do in life (a bad credit rating can keep you from getting an apartment or a mortgage, can cause you to lose your insurance coverage, and can even prevent you from being hired for a job) — and it is almost entirely unregulated on the front end. Anyone is allowed to put anything on your credit report without any sort of due process or requirement that they follow standard legal procedures. And the punishment for someone who besmirches your credit without just cause? Nothing.
Basically, the law provides only the slimmest protection for the consumer — you have the right to know what is in your file and to know your credit score, you must be informed if this information has been used against you, and you have the right to dispute false information. And credit reporting agencies are required to correct or delete inaccurate, incomplete, outdated, or unverifiable information (but only after you have initiated the complaint.) But you have almost no right to legal recourse unless a credit reporting agency is blatantly posts false information to your account or refuses to remove a fallacious black mark from your report — it's rare that anyone is ever able to bust a merchant for screwing with their credit.
What most people don't realize is that the credit reporting agencies are for-profit companies — they are not government entities or non-profit organizations or watchdog groups at all. They are not looking out for your best interests, their goal is to make money. The credit agencies invite banks and lenders to join their network (for a fee) — in return for providing information about consumers, these creditors may then obtain your personal information in order to solicit more business from you. The credit agencies frankly couldn't care less if your report is inaccurate or your privacy has been violated — in fact, they sort of hope you'll feel uneasy about your credit rating so you'll pay extra for a yearly monitoring system contract. It's all a huge scam, and I can't believe during the recent whirlwind of “fiscal reform,” this wasn't a bigger political issue. So much is determined by your credit score — it's shameful that unscrupulous merchants and credit agencies hold so much sway over people's lives.
So what can you do? Not much, but here are a few suggestions that will help you keep an eye out for (and deal with problems) as soon as they arise:
- keep good financial records of bills you have paid, contracts into which you have entered, and debts you have discharged in case they show up erroneously on your credit report later
- pull your credit report for free once each year at FreeCreditReport.com
- immediately contact all three of the credit reporting agencies (Equifax, Transunion, and Experian) if you notice a mistake or error
- also contact the merchant to let them know the item needs to be removed from your report
- keep track of outstanding financial “issues” — if you find a check that hasn't cleared or a bill that is listed as past due, contact the merchant to clear that up immediately — get written confirmation that the issue has been resolved and file that until you're sure the transaction hasn't shown up on your credit report
As far my situation goes, I paid the bill and the state is supposed to issues a notice to the courts. Then, it's my responsibility to send a copy of that notice to the credit reporting agencies. They won't actually remove the negative listing, but merely provide an addendum showing that the debt was satisfied — I can also mail in a letter explaining the circumstances in 250 words or less. Otherwise, I have excellent credit, and I don't expect that one item to really hurt me — but it's still going to sit on my report for seven years. It's a good thing that I no longer have my sense of self-worth wrapped up in my credit score (one of the perks of full-time RVing — you just don't need, use, or care about those things quite to much anymore!)
Ramona Creel is an award-winning 15-year veteran organizer and member of the National Association Of Professional Organizers. As well as having birthed “The A-To-Z Of Getting Organized,” Ramona is also the author of “The Professional Organizer’s Bible: A Slightly Irreverent And Completely Unorthodox Guide For Turning Clutter Into A Career”—and the creator of more than 200 “quick-start” business tools and templates for use by productivity professionals. She writes seven different blogs, has worked with hundreds of clients, and has delivered scores of presentations on getting organized. Ramona resides on the roads of America as a full-time RVer—living and working in a 29-foot Airstream with The Husbert and two fur-babies. Learn more at GettingOrganizedAToZ.com and RamonaCreel.com.
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