When did the credit score become the most important number in our lives?
It seems to have begun in 2003, when the federal Fair Credit Reporting Act was amended to allow everyone to receive 1 free copy of their credit report every year from each of the three national credit reporting bureaus – Equifax, TransUnion and Experian.
But it actually began earlier than that.
Read past the break for the detail.
When did the credit score become the most important number in our lives?
It seems to have begun in 2003, when the federal Fair Credit Reporting Act was amended to allow everyone to receive 1 free copy of their credit report every year from each of the three national credit reporting bureaus – Equifax, TransUnion and Experian.
One outcome has been an industry of sleazy companies that run big-budget television campaigns to:
+ Alert us to the dire consequences of a less-than-sterling credit report; and
+ Imply a connection between the quality of one’s credit report and the amount of time and money spent worrying about it.
Further inquirty with any of these operators yields:
+ An aggressive sales pitch for a paid service that allows a credit report to be monitored on a minute-to-minute basis;
+ Lots of new e-mail spam.
At the very least, they hope you’ll use their service on a one-time basis to access a free credit report, which can result in several outcomes, including:
+ Being charged a fee to get a copy of the credit report you thought you were going to get for free;
+ Being charged a fee to get a report on your credit that isn’t actually your credit report;
+ Being charged a fee to not get any kind of report, but to get a number that is based on your credit report but isn’t your actual credit score.
This isn’t the only result of gaining a right to see the information other people use to assess your credit-worthiness.
The financial sector loves it. As mortgage companies, investment bankers, fund managers and commercial banks played fast and loose with their customers’ money in the years since 2003, they also gained leverage; when people miss a payment deadline, it’s sometimes hard to tell what causes more angst: the usurious fees or the threat to ding the credit report.
The media loves it too. On the basis of time and column-inches filled, how-to advice about managing your credit report seems rivaled only by articles on how to lose weight.
(In both cases, very little really needs to be said: While the only way to lose weight is to eat less and exercise, the only way to get a good credit report is to pay bills on time.)
There is some justification to the notion that a credit report is more important today than it was, say, 20 years ago.
First, the nation’s household debt level has doubled in that time, making people more dependent on their ability to borrow money.
Second, fast-paced digital living has created new risks of identity theft – though this risk is apparently routinely overstated. Low-tech theft still outnumbers incidents of high-tech fraud, and most experts recommend using more online services to reduce hard-copy documents that contain personal information. (The universally cited source of this information is Javelin Strategy, which conducts an authoritative annual identity fraud survey; however it’s most recent survey summary fails to provide current data on the ratio of low-tech to high-tech theft.)
While maintaining a decent credit rating is important, spending money to worry about it won’t help. Checking your credit report once a year is enough, and here is the one and only official government-funded site where you can really do it for free: annualcreditreport.com.
This too will likely generate a fair amount of spam, but when it does the Federal Trade Commission has an e-mail address where you can complain about it – something about which the private sector doesn't concern itself.