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COPYRIGHT 2005 The Dallas Morning News
Byline: Pamela Yip
Jul. 24--After 100 years, the credit reporting industry is leaving the shadows and moving into more direct dealings with consumers.
Up to now, these encounters have not been happy.
As Americans come face to face with a $3 billion-a-year business that can influence their ability to get a loan, land a job and buy insurance, they're confronting an industry that long considered consumers commodities and financial institutions its paying customers.
The result is an uneasy, changing relationship that experts predict will result in continued consumer aggravation and calls for more government regulation.
Led by the Big Three credit bureaus -- Experian, Equifax and TransUnion -- the industry positions itself as a consumer-friendly service provider that lets lenders offer easy, equitable credit.
"We're the foundation in many ways of the American economy, for the achievement of the American dream," said Colleen Tunney, TransUnion spokeswoman. "Without a credit report, you don't drive off in a matter of minutes with your new car."
In treating consumers as a set of numbers, the bureaus also discourage discrimination.
"Prior to the automation of credit bureaus, it was necessary to have that face-to-face relationship" with a lender, said Jeff Davis, director of business development at Consumer Credit Counseling Service of Greater Fort Worth. "It was tough to get loans unless you were a white male."
The trade-off is that every American is subject to an industry that collects all the data it can on you, sells that data to almost anyone, would prefer to charge you to see it and can be slow to correct mistakes.
Elizabeth Warren, an author and Harvard University professor, sums up credit bureaus' relationship with consumers this way:
"I have no doubt that they're customer-friendly. They're just not friendly to you and me."
How the industry resolves that friction could determine how successful it will be in expanding its direct-to-consumer sales and minimizing future government regulation.
Born as collections of merchants sharing information about deadbeats, credit reporting companies now sell data for nonfinancial purposes such as weeding out job candidates and setting insurance rates.
"Credit reports are now being used as indicators of character and of fitness for jobs, for insurance and for other nonfinancial dealings," Ms. Warren said. "No one's sure whether any of those inferences are right. Many employers simply won't hire people who have bad credit records."
Some employers and insurance companies insist there is a connection between a person's credit history and his or her worth as an employee or as customer.
But such an idea rubs...
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