|Received:||5/22/2006 11:55:00 AM|
|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|
Comments:Procedures to Enhance the Accuracy and Integrity of Information Furnished to
A2: Patterns, practices, and specific forms of activity that can compromise the
accuracy and integrity of information furnished to consumer reporting agencies.
Collection agencies typically review a consumer?s credit report as soon as they
purchase or are assigned an account. The problem with this is that collection
agencies are notorious for coding inquiries as ?hard?. Hard inquiries, not only
impact a consumer?s credit score, but they are also visible to creditors.
Collection agencies reasons for using hard inquiries is to embarrass consumers
by letting creditors know this person may have a collection account and to use
as leverage to get consumers to pay by deliberately depressing consumer?s
scores. (Especially if the debt is time-barred)
This is especially damaging to consumers with short credit files or low scores.
For them, every single point counts. This practice becomes aggravating when a
debt is sold or passed around from one collector to another and each subsequent
collector places a ?hard? inquiry on the consumer?s report. Also, some
collection agencies have been known to abuse their permissible purpose by
placing excessive hard inquiries on consumer?s credit reports. They pull a
consumer?s credit file every few weeks or every few months. Consumers are left
with credit reports riddled with hard inquiries and lower scores.
When consumers complain, the consumer reporting agencies refuse to address the
issue, telling them to contact the collection agencies directly. When they
contact the collection agencies, the collection agency simply tells them that
the have an account and therefore, they have permissible purpose. These unfair
and malicious practices used by collection agencies is misleading to creditors
and diminishes the effectiveness of the FICO scoring system.