Paying For Access To Your Credit History

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The New York Times today has an article about freecreditreports.com. You've probably seen their commercials, which feature actors who sing songs about how bad their life is since their identity was stolen. Though advertised as free, the company's ultimate goal is to lure unsuspecting consumers to pay for its credit monitoring service, so apparently the FTC worries that its tactics are misleading. That may be true, but I have a different concern.

There are several companies that offer these services, despite the fact that, by law, you can already get your credit report from each of the three credit bureaus once per year for free. Of course, such monitoring services offer better surveillance for paranoid Americans. But the Times notes something specific about freecreditreport.com -- it's owned by Experian, one of the three major credit bureaus.

One of my biggest objections to last spring's credit card regulation legislation was that it completely failed to address the credit bureaus, which include Equifax and TransUnion, along with Experian. These bureaus' scores arguably have more to do with consumers' ability to get credit and the price they pay than any other factor. Yet, consumers are utterly powerless to the bureaus' whims.

So let's think about what Experian is doing. It's compiling information about consumers' credit histories on behalf of creditors. Those creditors provide Experian with that information and pay for its credit rating services and broader database access. So Experian's profits are wholly based by it owning your credit history. How is it fair that consumers should have to pay for full access to their own credit histories? They should be able to access that information whenever they wants, not just once a year. After all, the histories are theirs.

Of course, this is just one problem with the bureaus. I have no clue why they have no duty to consumers to ensure that their credit histories are accurate and fairly depicted. As I learned some years ago, no matter how correct the consumer is, it always boils down to their word against the creditors'. Consumers can file "disputes" that appear on items in their credit histories, but unless the creditor drops an incident, it still affect the scores. Sure, consumers could escalate a dispute to a lawsuit, but few incidents are worth the legal fees they'd have to incur.

Why, I wonder, don't consumers have more rights when it comes to the practices of these credit bureaus? They're private corporations, yet they virtually control the consumer credit market. If they say you have a low credit score, then you probably won't get credit.

Clearly, Congress has bigger fish to fry when it comes to financial regulation right now. But once things calm down, I would really like to see some attention paid to the credit bureaus. They have a lot of power and virtually no oversight. That's usually the ideal situation for the government to take note.

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Daniel Indiviglio was an associate editor at The Atlantic from 2009 through 2011. He is now the Washington, D.C.-based columnist for Reuters Breakingviews. He is also a 2011 Robert Novak Journalism Fellow through the Phillips Foundation. More

Indiviglio has also written for Forbes. Prior to becoming a journalist, he spent several years working as an investment banker and a consultant.
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