The Consumer CREDIT WHERE IT’S DUE

Having asked for credit from several department stores and a bank, and never having been turned down, I hadn’t ever considered asking for a copy of my personal credit rating. Nor had 1 guessed that a report on my credit history would contain anything but accurate statements about my ability and willingness to pay. This naivete ended abruptly when I paid a visit to Credit Bureau Services, 2819 North Fitzhugh, just off Central Expressway.

Credit Bureau Services is part of a vast network of local credit bureaus, which gather all sorts of data on the credit worthiness of millions of Americans. Many of them don’t know that their financial histories are being recorded and later reported, for a fee, to a disturbing variety of interested parties.

Credit Bureau Services is owned by the Chilton Corporation, a Dallas company which is one of the nation’s largest compilers of personal credit information. The building takes up an entire city block, and security is tight. The reception area is small – one desk, two or three chairs and a receptionist. One by one, visitors step up to the receptionist to state their business: to see a counselor, to ask for someone else’s credit rating, or to check their own.

After I produced my driver’s license, the Credit Bureau counselor began a computer search for my file. (The charge for a routine report is $4, but if a consumer has been denied credit within the last 45 days, there is no charge.) Within 30 minutes the computer produced an interesting print-out – the sum total of what 2,600 Dallas Credit Bureau members could learn about me simply by asking.

The basic information- my name, social security number and address – was correct. There were seven credit entries on the form, five from department stores, one from a music store, and one from a bank. Five of the seven seemed correct, each stating when I opened the account, the date of my last transaction, the highest balance and whether I made payments on time.

Not everything, however, was correct. On the line labeled “salary” was the princely sum of $333 a month, the stipend I received seven years ago on an SMU teaching fellowship. Two other things seemed out of order. The first was an indication that I owed a music store $33 on a guitar which I purchased in 1970 and finished paying for more than four years ago. The second error was more serious, stating that 1 had been late seven times in making car payments to the bank. In fact, I had never been late.

But 1 was lucky. As unflattering as my print-out was, I had never been denied credit.

The reason my salary was incorrectly reported was simple. I hadn’t changed the information at the credit bureau myself, nor had the Credit Bureau picked up any new salary information from my more recent credit card applications. To look into why my report showed seven late car payments, I headed over to Hillcrest State Bank, which lent me $4,399 to buy a car in the fall of 1976.

The receptionist in the loan section directed me to Mr. Monroe, a vice president. After I pointed out the serious error in my credit report. Mr. Monroe led me through a two-step correction process which began with the bank’s records teller. The bank records indicated that I had indeed been prompt in all of my monthly car payments. We then went to a computer terminal which linked Hill-crest Bank to the Chilton data pool on Fitzhugh. The secretary in charge looked at my credit print-out and verified that it did show me late on seven car payments. She explained that the information had been fed from Hillcrest’s terminal directly to the Credit Bureau and that somewhere the information had been recorded incorrectly. Once the information is stored in the Credit Bureau computer, it can be called up at hundreds of similar terminals in banks and stores all over town. Unfortunately, the computer doesn’t know the difference between right and wrong. One computer takes another’s word as gospel, so for anybody who had asked, I was delinquent on seven car payments in two years. Mine was one of three such cases reported by Hill-crest Bank customers in one week.

Once Mr. Monroe had verified the error in my record, the secretary prepared two documents – a standard correction form and a brief letter of clarification signed by Mr. Monroe. Both of these documents are essential, because without them, the credit bureau will not change anything on an individual’s record. No mistake on a credit record can be changed by the debtor’s word alone, although a consumer can have his record indicate that the bill is in dispute.

I left the bank for a visit to Whittle Music Company. I remembered the credit manager from nine years ago. She was the same woman who had set up my payment plan so that I could buy a guitar on my $333 stipend. She congratulated me on my fine credit rating and went on to explain that the $33 balance on my printout was the balance owed on the date of my last payment. The “past due” column showed nothing, which meant that my credit was fine.

While the people I talked to at the bank were somewhat critical of the Credit Bureau, the Whittle credit manager praised it highly, particularly for its computerized file system, a vast improvement over the old manual system. Ten years ago the Dallas Credit Bureau became the nation’s first bureau to computerize its files, eliminating many of the problems created by misplaced files.

There was a time when the need for a credit bureau wasn’t so great, long before department store credit cards, Master Charge, Visa, and car loans. J.E.R. Chilton Sr. founded the Dallas bureau in 1897, later passing control of the company to his son. Chilton Corporation remained entirely family owned until the Sixties, when the Chilton family sold some of its stock, but retained enough to keep firm control of the company. Today the Chilton Corporation, headed by the founder’s grandson, is listed on the American Stock Exchange and is a giant in the credit reporting business. It operates through 78 offices in 18 states and ranks third in size in the credit reporting industry. Most of the company’s income stems from its credit bureau operations – members pay the bureau for information. The remainder comes from automation services and a debt collection service, which incidentally furnishes the bureau with valuable information about bad debts.

Our economy encourages us to live on credit, a method of enjoying purchases as we pay for them, instead of having to save for the full price. There has to be an efficient way to determine who is creditworthy and who isn’t – it would be tedious and expensive for individual merchants to conduct their own separate credit checks. There also has to be some efficient system for singling out the bad debtors whose failure to pay bills raises prices for the rest of us.

Enter the credit bureau. Any time a consumer applies for a Dallas department store credit card or a bank loan, the department store or bank will probably ask for a credit report on the applicant. The prospective creditor generally wants to know if the applicant has shown a willingness to pay his bills promptly. If the consumer doesn’t pay promptly or defaults, it’s a cinch that the merchant will report the information to the Credit Bureau, which will duly record the information for all other merchants to see. Members of the Credit Bureau are obliged to report customer information to the bureau on request, especially information which helps identify bad debtors.

For all the good it does, the Credit Bureau does pose some problems. If an error is made, the credit applicant may never know it exists. The reason is simple: Most consumers have no idea that the Credit Bureau exists, much less how it works.

Ten years ago a consumer might have been denied credit due to an error on his record and never have known it, because credit files weren’t open for his inspection. Today, much of that secrecy has passed, with enactment of the 1971 Fair Credit Reporting Act. Credit bureaus must reveal the contents of a person’s file if he asks to see it. Technically the bureau only has to reveal orally the “contents” of the file. But 18 months ago Chilton Corporation began furnishing copies of files, along with explanations of their coded contents. Consumers also can receive copies of their files through the mail, upon written request, including reasonable proof of identity. Call 828-6381 for a telephone recording which explains how to make such a written request.

A consumer should be aware that any time he fills out a credit card application, the information becomes available to every member of the Credit Bureau. To prevent any misunderstanding, when filling out a credit application, ask for details about the scope of the credit inquiry which you are authorizing. Is the application merely authorizing a check with the Credit Bureau or banks which you might have listed? Or will your employer receive a phone call asking for all sorts of information you regard as private? Are you authorizing an investigator to look into your background?

What if you are turned down for credit? The Fair Credit Reporting Act requires that the credit bureau reveal the contents of your file to you, at no charge, if you have been turned down for credit because of information in that file. You have 45 days to make the request: after that, you’ll have to pay.

Perhaps the most important consideration in supplying information about yourself, and authorizing others to do so, concerns the uses of that information. Today, it can be used for almost anything – it’s amazing how easily people can obtain a copy. There are four reasons why someone may request your file. The most common is tor information per-tinent to an application for credit. The second is for employment purposes – remember, a prospective employer who is a bureau member can use data from your job application to check your credit bureau file. Often an employer is interested in seeing whether what you’ve told him matches what you’ve told your creditors, and whether you are deep in debt. The third reason is for issuing insurance policies. The fourth is the catchall: for “any legitimate business purpose.”

This fourth reason has some serious ramifications. Anyone interested in learning what’s in your file can do so if he is a member of the bureau or has a friend who is willing to make a request. Most of the large merchants and banks have terminals which automatically spew out the files requested with no questions asked. Others can obtain credit file information by telephone. Although it is a violation of a credit bureau member’s contract to obtain information for a non-member, it does happen. (Even a non-member can pay a one-time fee and ask for the information if he can present a legitimate reason.)

Fortunately there is a way to find out if anyone has been asking for your file, for whatever purpose, legitimate or not. Each time a request is made for a copy of your file, it is noted in a code which is shown on the file, under the heading “Inquiries.” A bureau counselor can explain who has received a copy of your credit file.

If you suspect that there is no legitimate reason for the request, then you may have the bureau telephone the company making the credit inquiry and ask why they did so. The reason will be reported to you, and if you don’t think it is legitimate, then you might consider suing for invasion of privacy. But remember, the Credit Bureau in most cases doesn’t pass judgment about whether a request to see your file is legitimate; it merely fills the request.

If you decide to check your credit file in person, it is best to make an appointment in advance, by calling 828-6260. Office hours are 9:30 a.m. to 4 p.m., although without an appointment it’s best to arrive well before closing time because the wait might be 45 minutes. For identification you’ll need a driver’s license and your Social Security number. A driver’s license isn’t required for positive identification, but without it you’ll need other types – credit cards, for example.

When examining your credit report, look at the two columns at the far right, which are the essence of your credit rating. One column reveals the number of times you have been reported late in paying each account, and the other lists your credit rating on each account, “1” being the best rating, ranging down to the worst, “9.” If any information seems incorrect, you can dispute it on the spot, and if you’d like to add information to update your file, you may do so for a charge ranging from $3.85 to $7.50. One other point – federal law now requires that a wife may ask for a credit file separate from her husband’s, so if she becomes widowed or divorced, she will continue to enjoy the credit rating built during her marriage.

In summary, some things to remember when applying for credit:

●Ask for details about the scope of thecredit inquiry to which you will be subjected.

●Do not feel compelled to supply information irrelevant to the credit transaction.

●Use the same name for each creditapplication; the computer does not knowthat Jane Doe and Jane D. Doe are thesame person.

●If you are turned down for credit, theFair Credit Reporting Act stipulates thatthe credit bureau must show you your fileat no charge.

Things to remember once you have a credit record:

●Any future creditor may use that record.

●Your record will be updated by thosesources listed on the original check, provided they are automatic.

●You are responsible for correctingand updating your record.

●The credit bureau will not correct anerror on your word alone; you are responsible for persuading the creditor tosend in a correction report.

●Forget your illusions about having aprivate credit history. What may seemvery personal to you is, after all, only data.