| Comment Number: | 522110-00053 |
| Received: | 5/20/2006 1:18:09 AM |
| Organization: | Trial Lawyers, Ltd |
| Commenter: | Robert Carye |
| State: | MA |
| Subject: | Procedures to Enhance the Accuracy and Integrity of Information Furnished to Consumer Reporting Agencies |
| Title: | Advance Notice of Proposed Rulemaking |
| CFR Citation: | 16 CFR Parts 660 and 661 |
| No Attachments |
Comments:
I have two concerns which I will describe in detail. My first concern is that many furnishers that provide information to a consumer reporting agency which is incomplete or inaccurate fail to realize the effect this incorrect information relates to a consumer's FICO score. Thus, the failure to properly list a consumer's correct credit limit or the ommission of a credit limit, can result in a considerable decrease in one's FICO score. The balance to limit ratio is a siginificant FICO scoring factor. When a furnisher fails to properly report one's true credit limit, the ratio then reflects an incorrect percentage of credit use. In other words, when a financial institution reports the consumer's credit limit as being the consumer's highest usage rather than the true credit limit, the balance on that particular revolving credit card will then produce an inacurate ratio of usage. For example, John has a credit line of $10,000.00 with a financial institution on his MasterCard account. John has never spent more than $2,000.00 on his MasterCard. John's bank only reports his high balance ($2,000.00) rather than his true $10,000.00 credit limit. John maintains a balance of $1,000.00. When John applies for credit, and FICIO computes his credit utilization based upon the balance to limit ratio, it shows John has 50% balance to limit ratio or credit utilization ratio. In fact, John's correct ratio should be based upon $1,000.00 of the $10,000.00 credit line which is 10%. Thus, John's FICO score is significantly lower than it should because the furnisher fails to report credit limits and reports high credit usage instead. What this means is John's score will be significantly lower because of this incorrect reporting and the credit issuer's failure to report a consumer's true credit line. This may impact John by as much as 100 points if John had just one revolving credit card. It would result in John appearing to have a debt problem when in fact, John's usage is really very minimal in comparison to his credit line. My second concern is based upon disputing inaccurate and or incomplete information with a consumer reporting agency and furnisher of information. From my experience in correcting mistakes on my consumer report file, I have discovered the same incorrect information that was reported by the furnisher to the consumer reporting agency is re-verified back to the consumer reporting agency following that consumer's dispute. In short, garbage in is garbage out. The frustrating part is that when the furnisher receives a dispute from a consumer, the furnisher fails to truly investigate the dispute, but simply relies on its computer record which may be inaccurate due to any number of reasons. Thus, when a consumer has an account (tradeline) on his or her bureau that does not belong to him/her and perhaps belongs to a spouse or another family member, the furnisher will not make the effort to investigate the inaccurate reporting and find out, but simply re-verifies the information in its computer. I had several accounts on my file whereby I was the signer without liability and my spouse was the liable party under contract. The creditors inaccurately reported the accounts as a joint obligation. The creditors failed to conduct a proper investigation by pulling a "hard file" and seeing that the credit application was not joint, but an individual and that my name was added as a signer. Now imagine the impact on a FICO score if the accounts or tradelines are not in good standing. Thus, this inaccurate reporting by the furnisher may have great impact on one's FICO score if the accounts are near their limit, have lates, in default etc. From experience, the furnisher's employees believe that by verifying an account on a computer screen is complying with FACTA. There needs to be clear language in FACTA that requires the furnisher to provide actual hard copy verification such as a copy of one's application, invoices, etc