The unnecessary pain inflicted by computers is not the fault of the machines, but rather that of the eagerwireheads who think computers are so neat that they should be used for everything. Enthusiastic nerds havestruck again, and may the gods of silicon save your credit report.
Credit information has been “computerized” ever since the punch card and vacuum tube, and saving and sortingmasses of data are ideal computer applications. However, near-infinite storage capacity has enlarged theopportunity for electronic black magic- the imaginary entry, and the intractable error.
Problems with cybercredit fall into two categories- old ones, and a brand new one known as “credit scoring.”
When you apply for a mortgage, your lender must hire a local credit bureau to interpret the electronic entrailsspread under your social security number at all three giant databases- Equifax, TRW, and TransUnion. A weekinto your application, the local bureau calls- “We show a 90-day late payment on your ChargeMax, and you willhave to explain it to your lender.”
Several thoughts come to your mind. I’ve never had an account with ChargeMax. For that matter, who the hell isChargeMax? How do I explain a late payment on an account I’ve never had? I checked my TRW, and it wasclean. How did it get on my record? How do I get it off?
Here is some blanket advice for dealing with mortgage lenders on credit issues. (You won’t like it, but don’targue. Wrestling in the internet just makes it worse.)
Your credit history is not real, it is virtual- it is whatever the electrons happen to say at any given moment. Dealwith it as it appears, not how it may “really” be.
If the local bureau can’t quickly remove an obvious error, write an “explanation” to your lender. “I was out of town/married/car accident/surgery/forgot” are allacceptable. Workable, but risky- “This is a mistake, and you are all a pack of fools!”
Don’t bother to try to remove ChargeMax from your record. If the loan closes, you’ve won. Don’t let prideinterfere with good sense- you can correspond with the big bureaus until doomsday as they happily cross-reportthe error (and new ones) back and forth to each other.
Don’t bother to “check your TRW.” If you want to check your history, order a full, three-bureau report includingtheir versions of public records under your name (IRS horrors, remnants of a divorce, mis-identified lien…).
Don’t be misled by the easy time you had last month with Toyota Credit, or getting a new Visa. Houses areharder to repossess than cars.
Those were the old problems. The new one, “credit scoring,” is an attempt to reduce your entire credit history toa three-digit number. Higher than 670, you’re in; lower, and you’re out. The model for computing the score,charitably, has a ways to go in development.
Example- you get a bad mark in the scoring equation whenever a lender checks your credit (an “inquiry”) –whether you take the loan or not. Shop among five car dealers, or open four charge accounts when moving to anew town, and the equation assumes you will soon be overwhelmed in debt. An effort to check your credit mayactually reduce your score by creating an “inquiry.”
More- you may fix the ChargeMax fantasy in 48 hours, but the low credit score you got because of the errorcan’t be repaired for four to six weeks.
Another- the bureaus don’t have to disclose your score to you, even if you ask, and you won’t know if there is aland mine in your file until you step on it. Further, since each bureau has a different version of your history, eachhas computed a different credit score.
A pack of fools, indeed. Fortunately, most mortgage lenders still use the old, subjective system, and if we arelucky, lawsuits will soon smother credit scoring in its crib.