The Credit Mess

I'm in a battle to remove false and inaccurate information from my credit reports. I've also been digging into just how badly screwed up the credit system is. One thing I found very interesting was this report that contains some very alarming statistics about just how common errors in credit reports are.

For example:

"Twenty-nine percent (29%) of the credit reports contained serious errors - false delinquencies or accounts that did not belong to the consumer - that could result in the denial of credit."

"Twenty percent (20%) of the credit reports were missing major credit, loan, mortgage, or other consumer accounts that demonstrate the creditworthiness of the consumer."

The second quote is what irritates me so much. These accounts weren't missing - the creditor probably just didn't report them. After all, the credit reporting system is completely punitive in nature, and companies couldn't care less about making sure they help keep your score high. Instead, they want to keep your score low, so you're stuck with higher interest rates.

Capital One is a great example of this. Most creditors report two numbers relating to your account: What your credit limit is, and how much of it you've used. Capital One, on the other hand, only reports what your balance is. This way, it appears you have higher balances than you really do. This keeps your score low, and you're not able to get a better credit card with a better rate. It's Capital One's little customer retention scheme.