I was half-surprised to read about how credit bureaus have a two tiered system when it comes to their credit reports and how they resolve errors. Apparently, the three bureaus are quick to correct errors for the rich and famous, while the rest of us peons get relegated to their automated system that takes months to resolve even the simplest of problems.

According to the NY Times:

The three major agencies, Equifax, Experian and TransUnion, keep a V.I.P. list of sorts, according to consumer lawyers and legal documents, consisting of celebrities, politicians, judges and other influential people. Those on the list — and they may not even realize they are on it — get special help from workers in the United States in fixing mistakes on their credit reports. Any errors are usually corrected immediately, one lawyer said.

While the headline of the article is about the VIP list, I felt the most important part was the bit about how they resolve issues. I’m not so naive to think the world is fair and everyone is treated equally – it’s certainly not. However, knowing that all they do it send my request to someone overseas to code it is valuable. (“complaints are often electronically ferried to a subcontractor overseas, where a worker spends, on average, about two minutes figuring out the gist of the matter, boiling it down to a one-to-three-digit computer code that signifies the problem … and sending a dispute form to the creditor to investigate”)

If they aren’t spending more than 2 minutes, I’m not spending more than 2 seconds to get the ball rolling. If I see a problem with a credit report, I flag it immediately and let them sort it out. If they require documentation on my part, then I’ll waste my time trying to look it up and collecting it. Knowing they spend just 2 minutes is valuable, it lets me know that I shouldn’t spend much time either (at least in the beginning).

How do you feel about this VIP list?

Your credit report and credit score are designed to calculate how likely you are to default on your loans. It’s increasingly being used in some surprising ways, such as determining whether or not to rent you a home. The reasoning for using credit this way, for determining whether or not to rent an apartment to someone, has to do with the reality that in many areas, it’s hard to evict a non-paying renter. You’re essentially “lending” them a place to stay with the hopes they pay you.

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Reader Kim emailed me a few weeks ago with a question I’ve, thanksfully, never had to deal with. Following the death of her mother, she was wondering if she should report her death to the credit bureaus. She’s already paid off and closed all credit accounts and by all accounts things are “settled.” Her lawyer didn’t know the answer so she thought maybe I did! (ha!)

My gut reaction is that you should notify them, and any other similar organizations, to prevent identity theft and fraud. By placing a “deceased alert” on your credit report, any potential creditors or lenders will learn, upon pulling the report, that the person is deceased and should not be extended credit (only relatives of the deceased can request this). I don’t see any reason why you wouldn’t want to do this.

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Short answer: Live in Colorado, Georgia, Maine, Maryland, Massachusetts, New Jersey or Vermont.

Long answer: In the seven states listed above, there are state laws that that require the credit bureaus to provide your credit reports absolutely free. These laws are in addition to the Fair Credit Reporting Act (technically, it’s the 2003 Fair and Accurate Credit Transactions Act which amended the FCRA) that requires the bureaus to provide your credit reports once twelve months, which you can access through AnnualCreditReport.com.

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CNNMoney tackled the question of why you don’t need credit score monitoring. Credit score monitoring is when you pay one of the credit bureaus (Equifax, TransUnion, Experian) a set fee each month to tell you if your score goes up or down. The fees range anywhere from $15 to $20 a month (or more) and that’s $15-$20 too much.

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If you thought that graduating meant the end of people grading and assigning you a number, think again. In the real world, it’s not your GPA that matters, but your FICO score. It’s a three digit number that is supposed to give creditors an idea of how credit worthy you are. Technically, it’s a measure of how likely you are to default on your debts.

It’s obvious why credit card companies, mortgage lenders, banks, and the like are interested in your credit score, but did you know that your employer, your landlord, your cell phone company, and your cable company are interested in it too? Anyone who may lend you something, like your cell phone company giving you cell phone minutes before you pay for them, is interested in how likely you are to make good on your financial promises. Your credit score has taken a life of its own, it’s about time you understood the beast.

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For a limited time, American Express is offering a free look at your Experian PLUS credit score and Experian credit report. The Experian PLUS credit score is not the same as your FICO score but there’s no way for you to see your FICO score based on Experian data, so this is about as close as you’ll ever get. Experian PLUS uses a different range too, from 330 to 830, versus the FICO score range of 300 to 850.

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If you’ve ever watched a television in the last few years, you’ve undoubtedly seen the FreeCreditReport.com commercials with the guy playing the banjo. In recent months, Experian, the parent company of FreeCreditReport.com, has come under fire because:

1. The credit reports are free, if you remember to cancel the trial (big if!).
2. Consumers have been educated by the FTC that they can get a copy of their credit report for free once every 12 months, no strings attached… except they have to go to AnnualCreditReport.com, not FreeCreditReport.com.
3. Consumers are, knowingly or unknowingly, signing up for the trial service, getting their free credit score and reports, and then not canceling.

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After my post on requesting your CLUE reports, Reader Bob sent me an exceptionally long and comprehensive list of all the specialty consumer reports that you are entitled to every year. When I wrote my first request your specialty report post, I had about half a dozen… this expands the list by a lot.

I was amazed by the sheer number of companies that collect information about me. I was aware of the credit report companies, LexisNexis, and ChoicePoint, but there are a lot of smaller companies collecting data like rental history that I’ve never heard of. While I’ve never been too fearful of the idea of Big Brother, the number of companies collecting information about me, and you, is a little disconcerting!

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Reader Christine recently left a comment on the What is a good credit score? post in which she asked how she could get unauthorized hard inquiries removed. For her particular case, it’s likely that she agreed to the hard inquiries when she “clicked on a link on some website that I do not even remember now and got phone calls from about 5 lenders. I had very enlightening conversations but decided not to apply.”

Whether you apply for a loan or not, when you request quotes you will have agreed to the lenders pulling your credit report. They can’t give you a rate quote without knowing your credit score and credit history. Reputable companies won’t pull your credit without your permission because it’s illegal (it violates this: Fair Credit Reporting Act, Section 1681b(c): Transactions Not Initiated by Consumer).

But there are cases where someone could make an unauthorized hard inquiry and the solution is to send a “remove inquiry letter” to the credit reporting agencies.

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