Myth #1The Nature of Credit Bureaus

Consider this myth: Credit bureaus are official   Even quasi-governmental agencies, and such vital American institutions work alongside your creditors to keep every adult citizen toeing the financial line.

There's so much wrong with practically every word of this fantasy that it's tough for a consumer advocate to know where to begin. To be sure, there isn't anything much official about the credit bureaus at all. Rather, the major consumer reporting agencies -- Equifax, Experian, and TransUnion -- are simply three large companies operating respectably within the private sector.

In fact, in you were so inclined, you could own a piece of Equifax and Experian yourself just by telephoning your stockbroker. (Forget about buying shares in TransUnion for now, though, as it's still privately owned.)

Sadly, too many creditors want Americans to believe that the credit bureaus enjoy an official, quasi-governmental franchise and will somehow punish consumers who dare to fight back against sloppy reporting, usurious APRs, exploitative late fees, inexplicable surcharges, unethical debt collection practices, and worse. Such creditors want consumers to believe that challenging a credit report item is like questioning a courthouse record. Fortunately, that's just not so.

So contrary to the prevailing perceptual reality, there are no official bureaus. And while most Americans perceive their credit reports to have at least the same legal standing as their driving records, the truth is that the government has no role in producing them. Put bluntly, no law mandates a credit report's existence, and such documents may be considered to be no more than a list of allegations remaining to be proven.  Information by Lexington Law.
Next Week:  Myth #2: Your credit report is reviewed carefully...True or False?