Credit

Why You Can’t Delete Your Own Credit File

Photo: amboo who?

We all know what the credit reporting agencies will allow consumers to do.  They’ll let you either purchase your credit reports or claim freebies periodically because of state and Federal law.  They’ll let you place fraud alerts on your files if you feel like you may have been exposed to identity theft.  And they’ll even let you place a short statement on your credit report if you want to explain your side of the story vis-à-vis an item you don’t agree with. 

However, there are several things they will not allow you to do under almost any circumstance.  They are:

1. Add Accounts to Your Own Credit Reports

The credit reporting agencies are all for profit businesses, which means they’re in it to make money.  The companies who they allow to report information into their databases pay them, in some way, for the privilege of doing so.  These companies, legally referred to as “data furnishers”, must either buy credit reports from the credit bureaus or pay a fee as a “data furnisher only.”  I know of several collection agencies that do not buy traditional credit reports from the bureaus but do pay a fee to furnish data to them.

And because you are neither a data furnisher nor a buyer of credit reports, the credit bureaus are not going to allow you to add accounts to your credit files. 

You might ask, “Why would I want to do such a thing anyway”?  The answer is quite simple: because your traditional credit files do not contain a record of all of your payment obligations.  Think of things like apartment or home rental payments, utility payments, gym membership payments, or any other reoccurring obligations you pay on time each and every month.  You’re not getting credit for that credit.  I’ve even had people argue that they view tithing as an obligation, yet they get no “credit report” credit for it.  Who am I to argue with them? 

The good news is, there are other alternatives, which I’ll discuss in future writings.      

2. Report Accounts of People Who Owe You Money

This one is very similar to the one above.  You are not allowed, as a non data furnisher, to report the payment activity of other people who either owe you money or otherwise make payments to you each month.  Think about people who are your roommates or tenants in rental properties.  It would be great to report them to the credit bureaus each month as either making their payments on time or not.

The reason you’re not going to be allowed to do so is because you’re simply too small, a one-man shop, so to speak.  The credit bureaus don’t want to fuss with a landlord who wants to report one or two rental obligations to them each month.  They’re set up as a volume shop, meaning they want large volume of reporting each month.  And frankly, they’re doing you a favor by not accepting your “accounts.”  Why?  Because the minute you report something on a credit file you become covered by the Fair Credit reporting Act and its 84 pages of rules, regulations and obligations.  Trust me, you’re not interested in dealing with that mess. 

Your alternative: do a really good job screening up front so you don’t have to leverage credit reporting to ensure on time payments.

3. Pull Credit Reports on Other People

The credit reporting agencies will not grant you access to their databases to pull credit reports on people other than yourself unless you have a darn good legal reason for doing so – and even then they may simply choose to not do business with you.  Nobody has the right to pull credit reports: it’s a privilege that they guard closely.  Again, if you own a home and want to rent out a room or have a rental property, you should check credit reports prior to turning over the keys.  But, the credit bureaus don’t see value to you buying one or two credit reports a year.  And, I can’t disagree with them.

Some have even argued that couples should be allowed to pull each other’s credit reports and scores before getting too seriously involved.  And, again, I can’t disagree.  Regardless, those credit reports won’t come directly from the bureaus.  You’re going to have to have that difficult conversation on your own sans credit reports. 

Your alternative: there are tenant-screening companies who will pull and resell to you a potential tenant’s credit report.  The cost is not terribly excessive, $20-$50 each, and that cost is generally absorbed or subsidized by the potential tenant as part of their application fee.  You can also certainly request that the tenant buy their own credit reports and hand them over.    

4. Remove Your Credit File From Their System or Otherwise Stop Maintaining a File on You

This topic is a lightning rod.  Many, if not most people do not like how the credit bureaus are able to collect, maintain, score, and sell your data without your permission.  The reason is simple: it’s your data regardless of how you want to slice the argument.  You have the mortgage with Chase.  You have the credit card with Wells Fargo.  You have the auto loan with Citibank.  The lenders didn’t force those loans on you.  You chose to do business…and chose to do business with them.  The accounts are yours. 

There is also a long history of credit file inaccuracies and, frankly, credit bureau negligence. If only you could see what I can see, you’d realize that the credit bureaus find themselves on the wrong side of FCRA and credit damage lawsuits hundreds of times each year.  The trust just isn’t there.  The comments to this article I wrote not long ago aren’t atypical consumer opinions of the credit reporting industry.   

You simply don’t have the authority to command the bureaus to stop collecting your data and selling it.  There is nothing in any Federal or state statute that gives us the right to do so.  In fact, a lot of the data that bureaus maintain in files outside of their credit report databases is unregulated.  That means anyone can buy it for any reason, and they can sell it to me regardless of how you feel about it. 

The closest thing you’ve got to getting out of their system is the credit freeze, which restricts who can access your credit files and prevents new accounts from being opened in your name.  This is an identity theft prevention service and it isn’t a free service unless you’ve already been a victim of fraud.  And, the “pay for freeze” services aren’t as advanced as credit monitoring services and can be expensive and chunky to manage.

I’ll try to be more uplifting next week.

John Ulzheimer is the President of Consumer Education at SmartCredit.com, the credit blogger for Mint.com, and the author of the “credit history” definition on Wikipedia.  He is an expert on credit reporting, credit scoring and identity theft. Formerly of FICO, Equifax and Credit.com, John is the only recognized credit expert who actually comes from the credit industry.  He has served as a credit expert witness in more than 70 cases and has been qualified to testify in both Federal and State court on the topic of consumer credit.