Wednesday, August 7, 2013
Do We Need Three Credit Reporting Companies?
I continue to wonder why there are still three credit bureaus for consumers to deal with. For those who are not aware, the origins of three consumer report companies has its origins in the days before personal computers and the internet. Experian was originally TRW and was based in the western United States and focused on consumer debt information in the western U.S. Meanwhile Trans Union was based in Chicago and primarily worked with financial clients in the Midwest and central United States. Equifax was based in Atlanta and adopted an emphasis on the east and southeast regions of the country.
The regional specialization disappeared with the advent of high-speed computers and the internet. Now when a banking institution, mortgage company, utility, employer, or insurance company wants to check the credit history for someone, they routinely "pull credit" from all three credit reporting companies. This is usually in the form of a credit score which assigns a number to rate how good or bad someone's credit payment history is based on data received from lenders, businesses, and lenders all over the country.
The unending problem with this picture is that when there are credit report problems, consumers have to deal with each credit bureau separately. This story almost never ends well.
Of course the individual companies have their own profitable reasons to stay in business even as doing so causes one financial nightmare after another. Where are corporate mergers when we really need one?