Credit Bureau - Controversy

Controversy

In the United States, 90% of credit reports provided by credit bureaus contain inaccuracies. According to the U.S. General Accounting Office (GAO), common causes of errors broadly fall into one of two categories: inclusion of incorrect information and exclusion of correct information. Reasons for the inaccuracies include consumers providing inaccurate information to the credit bureaus; incorrect or incomplete data input by furnishers, or failing to provide data to the credit bureau; and incorrect or incomplete data (or data applied to the wrong consumer) by the credit bureau. According to Avery, Calem, and Canner in Credit Report Accuracy and Access to Credit, "the parties that bear the costs of correcting errors or providing more timely and complete information may not receive much benefit from the improvement in accuracy."

The formula to calculate consumer credit scores by a credit reporting agency is proprietary and considered a trade secret of the agency in the United States.

Some credit bureaus in the United States provide two credit scores - an 'educational' score to the consumer and a customary FICO-like score to the lender or business. Liz Weston writes that some consumer advocates refer to these other credit scores as "FAKO scores" (a play on acronym of FICO).

According to David Szwak, a partner in Bodenheimer, Jones & Szwak which specializes in insurance law and litigation against credit bureaus, some credit bureaus in the United States maintain a VIP database of special consumers such as members of Congress, judges, actors and celebrities. The VIP database is specially administered by the bureau, which ensures the credit report of the consumer is accurate and not negatively handled. The database exists because individuals in the VIP database could cause significant problems for the bureaus, including negative publicity and legislative action which could adversely affect the industry.