I just heard an interview on NPR a couple of days ago - might have been Fresh Air? - where the interviewer asked about the basically unsupervised and huge power that credit agencies have. The discussion was about the credit agencies that evaluate financial institution (and about how AIG having a AAA credit was one of the principal reasons why they were able to underwrite insurance they couldn't possibly cover without showing any cash or collateral for it)
The scariest part of the interview was when they talked about the credit report agencies having gotten 1st amendment protection - which basically puts what can essentially become a major market manipulator outside the reach of certain type of regulation.
I am now wondering if the consumer credit reports have the same unchecked power. And I am all the more worried after what just happened to me.
I subscribe to one of those credit information services. Once every three months they send me an update on my credit situation - score, percentile, status of my debt and loans as they are reported to credit bureaus etc.
They also have a simulator function where you can create "what if" scenarios and see how various actions you'd take (pay off some of your debt, incur new debt etc.) might influence your credrt score. Now I understand that this simulator is for informational purposes only and you can't take it to the bank (ha!) but still, I was always happy to see that three months ago the simulator indicated that just paying my bills on time for three months would be enough for my credit to go up another 2-3 points. (my credit history is very short, so each passing month makes things better)
Shockingly though, when the next report came in yesterday (based on the Equifax data) my credit had gone down a whopping 50 points!!!! And that after in the past three months I didn't ask for credit, didn't go delinquent, paid more than minimum on all my cards and loans and my debt didn't increase - if anything it decreased, as I managed to make some substantive payments on some cards.
I've read all their information and I am very well aware of all the potentially negative factors for my credit - but I can say for certain none of them is the cause of this sudden drop. It looks like the only reason is because Equifax somehow decided to change their criteria.
OR, even more interestingly, maybe thsi is my actual credit and beforehand they managed to INFLATE it.
well, in any event, I just thought this might be interesting information and I'd be interested to know if there are more people out there to whom the same thing happened. Because I think that the power that credit reporting bureaus have over our lives is becoming worrisome when it gives signs of arbitrariness or inconsistency.