History of Credit Reporting Agencies

For approximately 150 years, each community had a credit bureau. An individual applied for credit and his dealing with the wholesalers and retailers in his area including his payment history was given a rating. If an individual had a problem collecting a debt from another, a protest in the public newspapers was posted. The system grew and maintained itself through human relationships. People had to learn how to trust each other. As human beings expanded into the world of technology and banks grew from becoming little community banks into national banks and national financial institutions, the business process became increasingly complicated. In 1970, a law was passed and signed by President Nixon known as Public Law 91-508 (the Currency Act), and a particular section of that law became known as the Fair Credit Reporting Act.

The Currency Act

The Currency Act gave our government the ability to track money or deposits in excess of $10,000 in the United States. It also legitimized credit bureaus into the computer era. At the time Public Law 91-508 was passed, there were approximately 15 large credit reporting agencies throughout the country. All were gobbled up by the big three, at that time known respectively as TRW, Equifax and Trans Union. TRW was a large conglomerate based out of California. Eventually the credit reporting division split off on its own to be known today as Experian. Equifax was based in the information-age, and held ownership on its own for decades. There was also TransUnion, a company originally in the business of shipping goods throughout the United States primarily via railroads. Trans Union eventually grew into the field of information. It took the 1970s and into the 1980s for the small bureaus to be merged by Experian, Equifax, or Trans Union. During the 1980s, three substantial credit reporting agencies existed whose business was obtaining credit information on every American citizen who had, or applied for, credit. There is a fourth bureau called Innovis located in Pittsburg, PA.

Medical Information Bureau (MIB)

There is also a massive information company that manages medical information on virtually every American citizen. It is known as the Medical Information Bureau (MIB). The MIB information on American citizens is massive; it houses medical records on most American citizens. If an individual applied for a life insurance policy, chances were his medical history was pulled through the MIB. Today there are the big three bureaus, so massive that if a consumer has a complaint on anything that is doing damage to their overall credit rating the odds are the effort to handle it via phone would include talking to someone in a foreign country. Some citizens have gone to juries, and millions of dollars have been awarded to citizens based upon several criteria. We at Tantillo Law see no reason for such extreme measures. We read and analyze case law from federal courts as well as state courts when necessary. There are remedies to simplify the process but, with so much revenue at stake, from the bureaus themselves to collection agencies,  no measure of change from a Congressional mandate will happen soon.

The credit reporting system is what it is, and you as a private citizen have two options. The first option most credit repair companies take is to attack the credit bureaus. In our experience, this is not necessary and a waste of time. What works is knowing the law, understanding the applicability of law and following decisions on how the credit bureaus should work including the multiple guidelines handed down through decisions of the Federal Trade Commission. Looking for a fight against the credit bureaus might give you an eventual win, but knowing your rights on correcting your credit and then rebuilding it works 100% of the time. Stop being brainwashed about the value of your credit score while you’re in the process of credit repair. This is another credit repair scam that is virtually meaningless. Bumping your credit score by 50 points means nothing if you have consistent drag from open and past collections or late payments. Those credit repair companies stating they successfully remove late payments are only telling you half of the story. Can late payments be removed? The answer is yes, but on accounts that have outlived the seven (7) year rule on the posting of credit information. This is tricky on many accounts considering those subscribers who report to the bureau have been notorious on re-aging the timeline on accounts, cutting off late payment histories and thus extending the timeline of the negative account. Procuring a process to come to a true accounting takes time, intelligence, and the applicability of using the Consumer Financial Protection Bureau, established into law through the Dodd Frank Act.

In our opinion, if you don’t know how to use the Consumer Financial Protection Bureau process in the credit repair industry, then you don’t know credit repair, period. The true process of credit repair comes from the contraction process on information. Take your information down through a legitimate process, then start rebuilding it and we will help you through that process. The big three and the fourth credit reporting agencies employ sweeping methods to obtain and maintain information on American citizens. The Fair Credit Reporting Act has been amended at least a dozen times since inception. The last update came September of 2012 and is highly complex. The credit reporting system is enormous and convoluted and not even the Federal Trade Commission knows how to fix it today. Problems exist in the application of the Fair Credit Reporting Act; where fair standards are supposed to be applied to the average American citizen. The process itself is so complex that it is nearly impossible for an average citizen to comprehend.

We at Tantillo Law have studied hundreds of federal and various state court decisions, as well as Federal Trade Commission lawsuits and their implication of fines against bureaus and collection agencies for abuses against the Fair Credit Reporting Act, the Fair and Accurate Credit Transactions Act and the Fair Debt Collection Practices Act.

Despite the complexity, it is quite simple to understand. Applicability, however, can be vastly nuanced. We will sustain a position as well explore why the credit scoring system has been a failure since its inception, when Fair Issac Corporation went into a contractual relationship with the three bureaus back in the late 1990s. This relationship has produced abysmal results to the average working citizen of the United States of America. The Fair and Accurate Credit Transaction Act (FACTA) is nothing more than the Fair Credit Reporting Act modified for conditions of identity theft. The Fair Credit Reporting Act was designed to bring a level playing field between individuals and the financial institutions of this country (this includes the commercial banking extensions of credit cards, auto loans and mortgages). FACTA establishes a system based upon a financial institution (defined as a state or national bank, a state or federal savings and loan association, a neutral savings bank, a state or federal credit union) interacting with a consumer via a transaction account (which include checking accounts, negotiable order or draw accounts, savings deposits subject to automatic transfers or shared draft accounts) Not included in FCRA or FACTA is the applicability to public utilities, the medical industry, doctors, hospitals or cellular companies as these are public service commissions based upon state regulation. The Federal Trade Commission guards the public trust by overseeing the fair applicability of federal laws and guidelines. Child support payments eventually began to be applied on credit bureaus through the FCRA. The ability to add child support on credit bureaus has been disastrous to American consumers. We will get into that argument on another date. Nothing exists regarding public utilities or medical collections relating to those laws. And these are the areas wherein Tantillo Law can be of tremendous service to you, the consumer.

Consumer Financial Protection Bureau (CFPB)

In most cases, after originators of a debt cannot collect any more, debt collectors purchase the debt for pennies on the dollar. The debt collectors are then keeping half the debt they collect or, in many cases, almost all of that is subsequently collected. What consumers fail to realize is that the debt was void. Debt collectors pursue the voided debt or take the information of the debt existing. They then proceed as the “owners of the debt” despite the fact that the debt is no longer enforceable. The debt being void does not stop the debt collectors from presenting to the debtor that the debt is active and that they are pursuing collections.

In many files we often cite at Tantillo Law where the Federal Trade Commission (FTC) comes down on a pair of debt collectors. We also use a federal agency known as the Consumer Financial Protection Bureau (CFPB), and will often get a restraining order to curtail the debt collector from engaging illegal activities against individual consumers. The CFPB has been under political attack recently, but we believe it will not only remain in force, but eventually become even a stronger advocate for consumers with oversight from perhaps the Federal Trade Commission.

When the Consumer Financial Protection Bureau took on Encore and Portfolio Recovery Associates, these two giant collection agencies were in for a fight.  The Consumer Financial Protection Bureau (CFPB) took action against the nation’s two largest debt buyers and collectors. The allegation was that each of these agencies employed deceptive tactics to collect bad debts. The CFPB found that Encore Capital Group and Portfolio Recovery Associates bought debts that were potentially inaccurate, lacking documentation, or unenforceable. Without verifying the debt, the companies collected payments by pressuring consumers with false statements. They then went on to file multiple lawsuits reliant upon robo-signed court documents. The CFPB has ordered these companies to overhaul their debt collection and litigation practices and to stop reselling debts to third parties. Encore was ordered to pay up to $42 million in consumer refunds; they also incurred a $10 million penalty. Further, they were ordered to stop collection on over $125 million worth of debts. Meanwhile, Portfolio Recovery Associates was ordered to pay $19 million in consumer refunds; they incurred an $8 million penalty, and were ordered to stop collecting on over $3 million worth of debts. These companies garnered and attempted to collect on debt they should have known was unenforceable. We at Tantillo Law understand this case and since the ruling has sought to employ the tools assured therein for the protection of the consumers who hire us to assure the utmost care is used to erase the blemishes such unscrupulous corporations unduly place upon one’s credit history.

We hold that a primary scope of the credit repair business is a complete understanding of the Fair Debt Collection Practices Act (FDCPA), also known as Amended Public Law 104208. We have mastered this process, understand the nuances of this law and have employed this law to the betterment of our clients. To properly procure solid credit repair, we comprehend the logistics of this law as well as maintain a strong grasp of the Fair Credit Reporting Act, the Fair and Accurate Credit Transaction Act, and the general public laws at the federal and state level. We believe you must conduct a full validation in order to understand the timeline of a client’s debt and the impact on a credit report be it positive or negative. The FDCPA was established to set a level playing field during the practice of collecting debt. It was designed to create a relationship throughout corporate participants in the national banking system and their affiliates. An additional section of FDCPA outlines the rights any other entity outside of the banking category would have to pursue collections from a consumer by assigning debt to a collection agency.

The Federal Trade Commission

The debt collection business is a multi-billion-dollar industry. Debts are often assigned to a debt pool after the owner of the debt places the information there. Not all states require a license for the agencies pursuing debt. States that do not require licenses have their actions overseen by the Federal Trade Commission. A great many debt collectors obtain information on bad debts via the debt pool system including the consumer’s name, address, social security number, and other valuable information. A consumer may have a $145 debt with Verizon Wireless who assigns it to collection agencies and simultaneously tags his credit report directly despite the fact Verizon Wireless is not a part of any bank system directly. Our current system applies a credit score to every consumer in the United States. The system is broken because of the exploits of companies and debt collectors. The easiest way a company might achieve some level of redemption against a consumer is to directly tag his credit report where $5.00 can cause a 40-point drop. Much of this tagging of individual consumer credit reports is illegal. Many of the bigger collection agencies have been hit by fines by the Federal Trade Commission and the Consumer Financial Protection Bureau.  This doesn’t stop them from going back and breaking the law again. Their actions are predatory against the consumer who has no idea this industry operates in such a manner and naturally trusts the business practices employed against him to be ethical. They are not.  As much as we believe the credit scoring system to be a hoax and the debt collection process to be broken, with even the FTC acknowledging the unfairness, there is nothing that can be done to correct the process unless the debt is wiped entirely from the collection system and recaptured into a different method. As we have stated, the system is complex.

Currently, the FTC is struggling for methods to attack the problem of correcting the system. Meanwhile, collectors are going after consumers’ credit illegally and attaching the same debt multiple times to a consumer. They are picking up information to collect a debt with a key element called the Assignment of Rights as they pursue debts during their greedy frenzy. Many are joining the ranks of debt collection, as there are endless parties all trying to have a hand in the debt collection process, making deals on debts already unenforceable within the states a consumer resides. All credit reporting agencies share their consumer information to super agencies into a tri-merge scoring system few understand. Companies which obtain information on consumers and then allow a subscriber (most often a debt collector) to pull up and act upon that information are subscribers to the services of the big bureaus. We accept the fact that the debt collection process is broken and heavily manipulated. Our diligence has exposed much of this illegal manipulation. We will attack the validity of each particular debt. Once we have properly and legally challenged them, we will strike those debts from the report of any consumer who chooses us.  Public utilities have spent millions lobbying Congress in an attempt to change the definition of the word credit.  Why you ask?  The answer is simple, manipulation of the Fair Credit Reporting Act means big business, and the abuse of the FCRA has been abused far too long.

Our public utility corporations and these lobbyists believe if you have power coming into your home that the issuance of that power from the company is not a consumer-purchased product but is, instead, a line of credit. This manipulation of even our basic vocabulary is ludicrous. The methodologies to abuse a consumer’s credit are numerous and out of control. Recently a bill was introduced in the House of Representatives called HR6363.  Fortunately, the bill never got out of Committee, but  it made no difference in the long run.  Public utilities are now part of the credit reporting process, and it will take several federal lawsuits on an individual basis or by class action to stop it.  On the next amended version of FCRA and FACTA there will be a section making public utilities a part of the process on credit reporting, without Congress ever addressing the issue.  It is a violation of your rights under FCRA and FACTA, and its reporting has a direct negative affect on the credit reporting system altogether. The credit scoring system was placed on credit bureaus without a single individual member of Congress ever knowing it was going to be implemented in the mid 1990’s, so why not have the lobbyist write a new FCRA and FACTA Verizon where it will appear as if the consumer believed a public utility was a line of credit all along.  It happened with the FICO score and the implementation of child support, so how is another obstacle going to hurt the American consumer.  In the long run, it has a negative effect on everything!

WE do not support any amendment of the Fair Credit Reporting Act whereas the definition of the word credit applies to the use of public utilities (electric, gas, cell phones, etc.). Cell phone companies and public utilities are all governed by public service commissions that exist in each particular state. These commissions are there to monitor how public utilities function with the public and to control profits. Utilities must seek passage each year of what amount will be charged for a unit of their product. The only act that has applicability is the Fair Debt Collection Practices Act which governs a consumer owing on a past due bill and how that may be collected. The utility must conduct this collection through a third party so that it can be negotiated and mitigated. Once it has been mitigated and negotiated, we are known for achieving credit report correction based through the validation process of connecting it to the actual bill or signed document demonstrating the debt to be a product of an agreement between a consumer and a public utility via a signed document.  There are issues that will need to be addressed in the federal courts at some point to even reduce the area of legal collections, and the pure collection process will only show those debts procured as part of the national banking system, and items of public record such as tax liens, judgments and bankruptcies.

The Fair Credit Reporting Act defined credit while attempting to level the ground between a consumer and national banks. Public utilities and their allies have taken a weak interpretation of FCRA and are breaking the law and opening trade lines that tie into a consumer’s credit when, in fact, the consumer is engaged in a purchase and has not indicated a desire for credit or is oblivious to what is happening. Rampant misreporting of public utility debts have created havoc on consumers as the process exploits or even destroys creditworthiness. Some legislation addressing the process of misreporting utility debt has also been introduced.

Our motto is “Validate, Validate and Validate” and we do this through the Consumer Financial Protection Bureau. We were pioneers in the dispute of medical collections and have applied and triumphed doing thousands of disputes revealing how medical debts were abusively reported to credit bureaus almost instantaneously. By applying and employing the rules and guidelines of the Federal Trade Commission and the Consumer Financial Protection Bureau, we helped establish a change in the rules of how a medical bill is reported. Consumers must receive a bill within 30 days and the right of to report such a debt begins, at the earliest, after an additional six (6) months. This gives the consumer time to perhaps put insurance in order or attempt to resolve it. Now medical bills must wait a total of 180-210 days before the issue may be legally submitted against your credit.

We are fighting the abuses by public utilities, and we are following much of the same path taken regarding the reporting of medical collections. Public utilities are already posting trade lines against past due amounts. Until the public utility reporting matters have been decided in the courts, we  advise clients who seek to avoid such action place utilities into an LLC or C-Corp of some nature. Get the bill off an individual social security number and onto a separate EIN (Employee Identification Number).

The bureaus have been used and in many cases an abusive objective against consumers in the enforcement of child support. Let us not forget, the FCRA was established as an agenda to level the playing field between the commercial banking industry and consumers. The enactment of adding child support was never debated, just added to the FCRA at a later amended version by making it legal pertaining to another forceful piece of legislation, the Uniform Interstate Family Support Act. The adding of child support was never fully comprehended how a spouse could destroy another spouse as a means of vindictiveness. The addition of child support was shoved into the FCRA without consideration of how it could easily destroy citizens caught up in the system. Once a person loses their credit in good standing, it is even more difficult to sustain oneself in the private sector. The addendum of child support into the FCRA was and still is a tremendous injustice to American consumers.

A consumer who wants to obtain credit needs to know the pitfalls to doing so. The credit scoring system today is complex and deviously designed to confuse. Most of the American public has been duped into believing that their personal worth is based upon a number they do not understand. The lower a consumer’s score, the higher his lending rate will be so it is easy to ascertain how the credit rating business is about making money not only for the lenders but also for the bureaus who deal in scoring. The losers in this? Consumers. The scoring system is arbitrary, based upon numerical criteria that has never been totally explained to the general public. We are brainwashed with commercials telling us that our personal value to society is based upon a number. It is a system that has failed, was a major factor in the real estate meltdown of 2007 and it carries onward to the present day. The scoring process is implemented into everyday life, from your job application, to your car insurance and life insurance rating, all the way to Wall Street and securities sold through the Securities and Exchange Commission guidelines. This scoring system has imprisoned millions of citizens into high interest rate debt, and it has failed society as a whole.

The Fair Isaac Corporation (FICO) score was implemented as a credit reporting system without any review or oversight from Congress. At the beginning of 1997, consumers began receiving credit scores. There may have been internal scoring going on prior to that but this is unverified and/or undocumented. An official scoring system began at that time through a contractual arrangement between FICO and bureaus which would present that score to business and, ultimately, consumers. Those national bureaus were: Experian, Equifax and Trans Union. Consumers began to see credit scores as of January 1997, shortly after the contract was signed. The contract was for 20 years and at the end of 2016 the business of credit scoring could drastically change.

Tantillo Law believes there should have been Congressional and/or representative involvement prior to implementing a system which could hold influence and/or damage consumers. The credit meltdown predicating a recession that happened in 2007 was somewhat a product of this lack of oversight. Congress had indicated a consumer had a right to his credit score in 2002 but, until that time, the information was privately passed between entities; no official did any work to determine what the result of this secretive process would be. In short, it was a way for Experian, Equifax and TransUnion, the providers of the credit score, to stir up a great deal of business for themselves based upon a variable number derived through an equation no person completely understands (there are theories on such but no conclusive proof). The scoring process has made billions for corporate America without justification. It has made billionaires multi-billionaires, poor people even poorer. Consumers, in particular, do not understand how their usefulness to business is based upon this number achieved through mystifying and unexplained means. A $20.00 collection from an old cell phone bill that should not appear on the consumer’s credit report in the first place, can have extremely damaging consequences. The work and study to determine whether a consumer should be granted a loan is now erased in favor of a number businesses can glance upon for such a determination. As we saw during the recession of 2007, the lack of oversight can have devastating consequences. Those damages consist today in the millions in abandoned homes, and trillions in zombie debts that can never be enforced. The final loser because of this oversight, you guessed it, the taxpayers of the United States.

The scoring system has generated billions of dollars in additional revenue. So much that a score called the Vanguard Score was developed by Experian who, in 2003, dropped FICO and wanted out of the contract to begin selling it. This resulted in FICO suing Experian, Equifax and Trans Union. Threatened with a lawsuit by FICO, Experian paused the Vanguard Score system and returned to FICO. A series of lawsuits involving FICO led to the courts determining that corporation did not hold patent on the idea of a scoring system and allowed for other entities to implement their own should they so desire. So each of the bureaus has been gearing toward the end of the contract binding them to FICO. Get ready as the Vanguard Score is coming in force, and FICO will be dead. Or Will It?

Meanwhile, FICO has now gone into credit reporting on their own in countries outside the United States. By 2019, there might be the fifth bureau to be in the business in the United States because what we know now as FICO scores will be dead with the bureaus because the contract binding them all will come to term. Instead, a free-for-all will occur when each of the five national bureaus (now including FICO itself as a bureau) will be fighting to implement various scoring systems each with their own methodology. The bureaus will drop FICO and begin tracking through the Vanguard Score which will now come at a cost for consumers to achieve better scores.

Tantillo Law seeks to be a leader in the fight for consumers during this tumultuous time. We are up to date with what is transpiring and will readily fight to maintain the consumer position.