Credit scores

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Having a credit score is like having a tattoo of a barcode on your forehead, and the tattoo artist is like a consumer reporting agency (CRA). It's actually perverse-we all agree to be watched, located, defined, classified and evaluated. And if we don't? Financial banishment-we're thrown to the credit wolves and loan sharks. This arrangement creates a caste system fueled by fear and exclusion. Financial surveillance is a corrupt and impersonal machine, not a system that genuinely determines people's trustworthiness. Can't make a credit card payment because of health costs this month? It's recorded. Got laid off and couldn't pay tuition? It's recorded. Tried to pay a mortgage fee with an already-low checking account? It's recorded.

And who records all of this? The agencies, bureaus and companies that are watching over us: Equifax, TransUnion and Experian; ChexSystems and TeleCheck (to name only the biggest). This chapter is about how these agencies control us-their methods, their mistakes, their profits-and how we can maintain dignity despite their power.


There are three major national credit reporting agencies-Equifax, Experian and TransUnion-as well as many smaller ones. In 2009, the big three CRAs had combined revenues of more than $6.7 billion dollars.1 These agencies collect your information from creditors, store it and send it out to those who request it in the form of a "credit report." They also compile it into a "credit score" or "credit rating," a much simpler number that allows for the ranking of people.

These agencies started in the 1950s as regionally based companies that would track the personal details of your life-when you got married, if you got a ticket, or if you committed a crime. Before technology allowed for the tracking of massive amounts of data, these companies could only compile information about a particular type of credit-like your regional banking history or your mortgage-so data was not shared across industries.

Over the last forty-five years, however, CRAs have come to play a crucial role in our ability to get access to even the basic requirements of life in our society. If you need anything more than just a small purchase-heating, gas, a phone line, medical care, education, personal transportation, insurance- someone has to scan your "tattoo." A number comes up on a screen. This person can see the screen and you can't. If they say your number is good, then you can go ahead and buy what you need. If they say the number is bad, things will become a lot more difficult for you.

And the reach of CRAs is expanding: recently, a new phenomenon has emerged that has been described as "mission creep." Many landlords require a credit score, which means that credit agencies have a power over your ability to find housing. Insurance rates are starting to factor in credit scores too. Hospitals have begun to charge patients and determine access to health care according to their credit scores. And finally, employers have begun demanding that job applicants provide credit reports.

A tremendous amount of power over the daily lives of people is given to organizations that operate almost entirely outside of public oversight, with next to no democratic accountability.

o In recent studies, more than 20 million people found material errors in their credit score calculations.2 o The government currently regulates very little of this entire process, including who can send information to the people who compile your score and who can access the information once its compiled. o Those in communities with higher concentrations of people of color are twice as likely to have low credit scores as those in other areas. Higher fees and interest rates are imposed on those with low credit scores, ensuring that class divisions along racial lines remain unchallenged.3 o It can seem difficult and futile to investigate or repair your credit score, but it isnt. There are ways. Keep reading to find out how.


As for how the system works, there are problems on every level. On the ideological level, credit scores are crucial in creating and maintaining a culture of debt. How does this work? In order to qualify for most housing, for example, you need to have a good credit score. And in order to have a good credit score, you need to have, guess what? Debt. You might think that being free of debt would qualify you for a good credit score, but that is not the case. You will only have a credit history if you have existing debt. In yet another way, the system forces you to enter into debt just to be able to provide for your basic needs.

In addition, many credit reports are just plain wrong. A 2004 Public Interest Research Group (PIRG) study revealed that 79% of credit reports contained errors; 25% of these mistakes were serious enough to result in a credit denial. More than half of all credit reports contained outdated information or information belonging to someone else.4 With this number of mistakes, you have to wonder what this system is really about.

You might think that because the rich actually use credit so much more, they would be the ones mainly affected by these errors-not so. In fact, the poorer you are, the more likely your credit agency is to make a mistake that influences your rating.


The scoring models are endlessly complicated, and different agencies use different ones, so it's never entirely clear what you can do to improve your score. With that said, the most commonly used model is "FICO" (Fair Isaac Corporation), and we do know that that score is comprised of the following:

35% payment history 30% amounts owed 15% length of credit history 10% new credit 10% types of credit used Although we don't know exactly how these areas are evaluated, making regular payments, not having too many credit cards or other lines of credit, and keeping the ones you do have well below their limits will always help.[5]



1. Demand accountability. The Consumer Financial Protection Bureau is now an operating governmental body. We should ask if it's doing its job when it comes to credit scoring. If it isn't, why not? If it is, can it do more? 2. Demand regulation. Seven EU countries and seventeen Latin American countries have public credit scoring agencies. Why don't we? 3. Demand transparency. Although they're hugely important to us, we have little say in how or why our credit scores are calculated. Can there be a democratization of credit scoring? 4. Check your numbers. We can change this system, but we have to know it first. This is how to do it: Go to: Call 877-322-8228 or Complete the Annual Credit Report Request Form and mail it to: Annual Credit Report Service P.O. Box 105281 Atlanta, GA 30348-5281 In order to receive your free report, you'll need to provide your name, address, Social Security number and date of birth. You may need to give your previous address if you've moved in the past two years. For security reasons, you may also have to give additional information like an account or a monthly payment you make. Beware of scams: those charging to get your score or signing you up for "free" services in order to access your score. And beware of those offering to help your score; there is nothing they can do that you can't do more effectively and free of charge. 5. Demand accuracy. There are laws that protect debtors from unfair and inaccurate credit score practices: the Truth in Lending Act, Fair Credit Reporting Act, Fair Credit Billing Act and Equal Credit Opportunity Act. All guarantee protection and the possibility for citizen-directed credit scoring and reporting. 6. Reject the system. It is possible to live without a good credit score. If you can muster the time and energy to make some life changes, you can go totally off-grid. Below are some recommendations on how to live without the benefits of a good credit score: o Prepaid cell phones are always an option. o For housing utilities, if you have a roommate, you can ask them to put the accounts in their name. If you live alone, ask a relative or friend. o Opt for services that don't require credit checks. If a company requires a check, try to talk them out of it. Build up an old-fashioned trusting relationship by spending time talking with the person. They may choose to bypass the credit check. o Create your own credit report: put together a portfolio showing you are a trustworthy person (reference letters, job history, life narrative). o Check listings for housing, cars and other necessities that are informal and don't go through brokers or other formal agencies. o Offer to put down larger deposits in lieu of a credit check. o Build networks of mutual support in your community so you rely less on outside services.

DIY credit repair[edit]

It is best to repair your bad credit score yourself. This helps you avoid scams and fly under the radar of the CRAs who are looking to block credit repair companies from gaming their system. There is a host of books, websites, articles and other resources dealing with this issue. Below are the steps we recommend taking: 1. Get a copy of all three of your credit reports. 2. 2. Review your credit reports and note every single error. Note incorrect spellings of your name, inaccurate data and any "derogatory" information. 3. 3. Write letters disputing negative information and errors to the corresponding agencies. 4. Describe in your letter how you found out your credit was bad and how shocked you were at all of the errors the agencies have been reporting. Then ask them "per the Fair Credit Reporting Act (FCRA) enacted by Congress in 1970," to either provide physical proof of their claims or delete the mistakes immediately.

Include your name, current address and Social Security number on your letter. You should not include any additional information. Simply list the entry that you are challenging and briefly explain why you are challenging it. You only need to write a couple of words to do this-less is more. Say things like "this is not mine," or "this record is inaccurate." Be sure to make the letter sound unique to you. If you do not, you may find that the CRA responds by saying that your claim is "frivolous." This is the way they get rid of credit repair companies, and why you should not use one of them. There are competing theories on whether or not you should challenge everything on your report all at once. You are legally entitled to have each item you challenge verified at any point in time.

When sending your letter, request a "return receipt" or "delivery confirmation." The CRA has 30 days to respond to your dispute. If they do not respond within that time frame, you will have evidence that they are in violation of the Fair Credit Reporting Act. 5. Don't give up after the first round. Within a month, you will receive a response from the CRAs. Typically, they will only state whether or not they were able to verify an item. For any items they claim to have verified, you should contact the creditor directly and demand that they provide proof that the debt is yours. You can also continue to challenge the entry with the CRA. (See Appendix A for sample letters.)

If you play this game, you really can win (eventually). Keep pressing on and hammering them with letters demanding they correct their mistakes and they will eventually get sick of your letters and start deleting negative trade lines from your report just to shut you up. Assume that you will be writing letters for six months to a year, but you should see a substantial improvement to your credit report and score within three months. As usual, the person who yells the loudest for the longest wins. And don't forget, repairing your credit score is not necessarily about regaining validity in the eyes of the system: it is about challenging an exclusionary and unjust surveillance machine.


The credit score is an essential piece of economic surveillance, but it's not the only one. There are other ways of watching us and keeping us in check. Everyone has a credit score; many people also have a checking account. Just as a series of private corporations monitors your borrowing activity in the economy, a different group of private corporations monitors your checking account. And just as the credit score companies make a profit from calculating your score, consumer reporting agencies monitoring checking accounts make a killing when you overdraft or miss a payment.

ChexSystems and TeleCheck are two examples. Financial institutions report instances of "account mishandling" to them. TeleCheck primarily deals with bad check writing while ChexSystems, used by over 80% of banks in the United States, deals with that and more: non-sufficient funds (NSF), overdrafts, fraud, suspected fraud and account abuse. Retailers can report bad checks to Shared Check Authorization Networks (SCAN), which can in turn report to ChexSystems. When someone tries to open an account elsewhere, the agency notifies the institution about that applicant's history.

Unlike the seven-to-ten-years timeframe observed by credit reporting agencies, checking information remains in the system for five years, unless ChexSystems or TeleCheck is forced to remove it earlier. Another difference is that ChexSystems, unlike credit bureaus, only provides negative information in their reports. Therefore, a single banking error can result in losing an account and cause immense difficulty trying to open one up elsewhere. Something as inconsequential as failing to rectify a deliberately confusing overdraft fee is enough to negate decades worth of "responsible" banking.


There are some steps that can be taken to avoid triggering a ChexSystems or TeleCheck report in the first place. Of course, there's no guarantee because you're not exactly dealing with trustworthy institutions. But it certainly doesn't hurt to know your balance before writing checks to make sure they won't bounce. And if your checkbook ever gets stolen, report it to your bank or credit union immediately. When you are closing an account, be sure to discontinue all automatic payments, wait until you're certain that all checks you've written have cleared and formally close the account instead of simply taking all of your money out.6


Suppose that, in spite of your best efforts, you still end up with a report from one of these consumer reporting agencies. There are a number of possible approaches, with varying degrees of desirability. The first is to try to live without an account. As Chapters VII and VIII will illustrate, this can be difficult, but many people have no option but to survive "unbanked." Another approach would be opening an account at a financial institution that does not use ChexSystems or TeleCheck. A state-by-state directory is available at This approach, however, is not available for those who do not live near any of these banks or credit unions. In some states, you can take a six-hour "Get Checking" course, upon completion of which you can open an account at a participating financial institution. But there is a $50 course fee, and guess who sponsors the program? A parent corporation of ChexSystems by the name of eFunds.7

It would seem that simply paying the bank for the debt you ostensibly owe might alleviate the situation. In actuality, you may be worsening your situation. This is because the bank can report activity to the agencies five years from the date you last paid. If you have a debt from 2010, it would be removed from your report in 2015 if you ignored it. This would present its fair share of problems, but if instead you paid the debt four years down the line, then it might haunt you until 2019. That's four more years of struggling to open a checking account than if had you done nothing.8 In other words, the older the debt, the less worthwhile it is to pay back.

A final option for consideration here is to actively fight the reporting agency as well as the bank that reported you. The first step is obtaining a copy of your report.

Getting a report[edit]

Regardless of your account history, you are entitled to a free copy every twelve months. If you are denied an account because of your report, you are entitled to a free copy within sixty days from the consumer reporting agency that is responsible. To request a copy of your report, go to consumerdebit. com for ChexSystems or for TeleCheck.

When making a request, only provide information that is necessary, such as your name, Social Security number, address and possibly a previous address. They may ask for a work address or phone number, or your current checking account number, but you do not need to provide them with this information. You can simply say that you're currently unemployed and/or don't have a current checking account.9

If the agency refuses to provide you with a copy of your report or you fail to receive it within sixty days of being denied an account, you can submit a complaint to the Federal Trade Commission (FTC) at Then send a letter via certified mail to ChexSystems or TeleCheck notifying them that they are in violation of the Fair Credit Reporting Act and that they have fifteen days to send you a copy of your report. Let them know that you are willing to pursue legal action and that you have already contacted the FTC.

Writing angry letters[edit]

If it turns out that a debt on your report is from more than five years ago, do not file a dispute. Instead, send a letter requesting the debt be removed on the grounds that it is over five years old. In other instances, you should write a letter disputing negative information contained in the report.

First, send some angry letters to the reporting agency: 1. Send an initial dispute letter to ChexSystems or TeleCheck (see Appendix B, sample letter #1). Send it via certified mail with return receipt requested. Make copies of the letter and send it to your lawyer if you have one.

If your dispute is based on an annual report, then the agency must reply within forty-five days of receiving your letter. If your dispute is based on a report that resulted in you being denied an account, then the agency must reply within thirty days of receiving your letter.

If they respond, they must state in their response whether they were able to contact someone to verify the information contested in the report. If you do not contact them during the thirty/forty-five days after your first letter, they are less likely to respond, which in turn means it is more likely that they will be forced to remove the disputed information on your report. " If they were able to verify, then it stays in the report. " If they were unable to verify, then the information must be deleted.

2. Send a "demand for removal" letter (see Appendix B, sample letter #2). Within fifteen days, they must provide you with the address and phone number of the financial institution that they contacted. If they do not respond to your "demand for removal" letter within fifteen days, send a procedural request letter (see Appendix B, sample letter #3). " If they do not respond to your initial dispute within thirty/ forty-five days, then send a "procedural request" letter (see Appendix B, sample letter #3). " If you can prove that there was an error and prove that their failure to remove the disputed information has caused you financial harm (i.e., you cannot open a checking account), then you can pursue legal action. " You can also present your side of the story in one hundred words or less, which will be attached to your report. When banks are making a decision about letting you open an account, they will at least get to see your statement too.

Then, send some more angry letters to the financial institution:

3. Banks are legally required to be 100% accurate in their reporting. Look for any type of error: incorrect name, Social Security number, address, dollar amounts, date of last activity, date account first became negative. If a mistake is found, send a "demand for removal" letter to the reporting institution's manager or executive. " If the bank or credit union has reported account abuse, suspected fraud or fraud to ChexSystems or TeleCheck, see Appendix B, sample letter #4. " If the bank or credit union has reported NSF to ChexSystems or TeleCheck, see Appendix B, sample letter #5.



Carreon and Associates ( ChexSystems Victims ( National Consumer Law Center: Credit Reports (


Shawn Fremstad and Amy Traub, "Discrediting America: The Urgent Need to Reform the Nation's Credit Reporting Industry," Dēmos, 2011 ( DROMFremstad). "Information on Free Credit Reports," NEDAP ( Mark Kantrowitz, "Credit Scores," FinAid!, 2012 (


1. Gale Group, "Credit Reporting Services Market Report," Highbeam Business, 2012 ( 2. Shawn Fremstad and Amy Traub, Discrediting America: The Urgent Need to Reform the Nation's Credit Reporting Industry, (New York: Dēmos, 2011) ( 3. Board of Governors of the Federal Reserve System, Report to Congress on Credit Scoring and Its Effect on the Availability and Affordability of Credit, (Washington, D.C.: GPO, 2007) ( 4. Malgorzata Wozniacka and Snigdha Sen, "Credit Scores: What You Should Know About Your Own," PBS Frontline, November 23, 2004 ( 5. myFICO, 2012. "What's in my FICO Score." ( 6. Rob Berger, "ChexSystems: The Banks' Secret WatchDog is Watching You," Dough Roller, June 18, 2011 ( 7. Don Taylor, "Negative ChexSystems Report Nixes Account," Bankrate, March 8, 2006 ( 8. Mary, "ChexSystems Help?," ChexSystems Victims, 2011 ( 9. Mary, "Free ChexSystems Report," ChexSystems Victims, 2011 (

KYD: Credit Reports and Credit Scores[edit]

What is a Credit Report and a Credit Score?[edit]

Credit reports are basically your debt rap sheet. Any experience you have with borrowing—even if that’s a credit card that you’ve always paid off—is on your credit report. (There are some exceptions: payday lenders, for instance, generally do not report to credit reporting agencies.) Although credit reports were initially invented so that creditors could share information on debtors with each other, they have proven such a good spying device that they are now used by landlords, insurance companies, employers, and law enforcement agencies. You can hardly go anywhere anymore without having a credit check run on you.

Think about that for a second: debt has become so central to our lives that for almost anything you do, your character is judged based on how obedient a debtor you’ve been. That sure gives creditors a lot of leverage over you, doesn’t it?

Credit reports are the main tool many creditors use to determine whether you’re “worthy” of their loans. No, seriously. They call it “creditworthiness”.

The more information creditors have about you, the better they can predict what it will be like to lend to you. Creditors, as you might expect, prefer to give loans to people who are more likely to repay. So if you have a record of repaying loans, you will find it easier to get a loan at low interest rates (since the more creditors willing to give you a loan, the less any of them will be able to charge you without being underbid by another creditor). Generally creditors use an algorithm that generates a credit score, which is basically a sophisticated ranking of how likely you are to repay.

But creditors can go a step further than that. Even more than they like having you repay, creditors like when you overpay. With enough information, they can figure out which debtors will be “revolvers”—people who reliably pay only the minimum amount on their loans, thus ultimately paying more because of interest accumulation. They can then target different loan types, with more predatory terms, to people who are already struggling. When those people get targeted for more predatory loans, they begin struggling even more. When they can’t keep up with payments, then they get bad credit reports and can only get expensive loans (or no loans at all). They are discarded as no longer useful. Then they struggle to get jobs, housing, and affordable insurance. Isn’t this a lovely system we have?

Credit Reports[edit]

Credit reports are maintained by the “Big Three” credit reporting agencies (CRAs), Transunion, Experian, and Equifax. Most people have a credit report with each of these agencies. You have no say as to whether they can have a credit report on you or not. These agencies do not always have consistent—or accurate—information. When checking your credit reports, it is important to check all three.

CRAs are for-profit companies. They make their money selling information to creditors, so they really only care about making creditors happy. The Fair Credit Reporting Act (FCRA) gives you some rights, but generally CRAs do not care about you except as a source of information they can use to make money off of. They will make you insist on your rights.

Credit reports contain the following information about you:

Personal identification information (name, social security number, birthdate, past and present contact information) Loans and credit accounts (“trade lines”) you have had open over the past seven years Payment history, current repayment status and credit limit on those accounts List of creditors and others who have requested to see your credit report (“inquiries”) Public records from the past ten years: court judgments, bankruptcies, foreclosure actions, etc. Sometimes employment history Comments from you clarifying information on the credit report Generally payday loans, rent payments, and utility payments are not on credit reports.

Credit Scores[edit]

Credit scores take the information on your credit report, run it through an algorithm, and spit out a three-digit number that’s supposed to represent how likely you are to repay debts you take out.

You don’t have just one credit score. Different credit scores are used for different purposes. Any credit scores visible to you on your credit report are for “illustrative purposes”—to give a sense of the range your credit score is in.

Most credit scores are generated by an algorithm developed, owned, and maintained by FICO, a for-profit company. The Big Three CRAs also came together (isn't it nice how they cooperate!) to create their own set of credit scores called VantageScore.

Although it is simple to say that credit scores predict how likely you are to repay, in fact they also promote indebtedness. People who take on no debt generally have no credit scores because they are “unscoreable”. People who take on only a little bit have “thin files” and generally have low scores. Also, your credit score is likely to be higher the more debt you have, even if you’ve occasionally had trouble paying on some of that debt.

Most credit scores range from 300 to 850, with 300 being "least likely" to repay (or whatever else the score is predicting) and 850 being the "most likely". Although thresholds vary, borrowers with credit scores below 640 (sometimes 620, sometimes 660 or 680) are considered “subprime” while borrowers above are considered “prime”. Subprime borrowers are offered worse loan terms than prime borrowers.

You may have heard of the "subprime housing crisis" that crashed the economy? Well, that was caused by extremely unfair loans being pushed on borrowers with low credit scores who did not have the means to pay them.

Some lenders—like credit card companies—divide up debtors into even more refined chunks, offering different terms and rates to each. If you have received credit card offers in the mail, it is because that credit card company has bought your credit score from a CRA (yes, without your permission), decided that you might be easy to make money off of, and offered you a credit card as bait. See more in the CREDIT CARDS section on this page.

Although algorithms vary, the rule of thumb for what goes into credit scores is:

Payment history (~35%): Whether you’ve paid and paid on time. The more accounts you have with no late or missed payments, the better your score. Utilization (~30%): How much of your credit limit you’re using (this only applies to accounts like credit cards that have credit limits). The less you use, the better for your score. That means even if you borrow the same amount, your credit score will be higher if your credit limit is higher. Length of credit history (~15%): Longer is treated as better. Included: the oldest account you have, how long since you’ve last used your accounts, average age of accounts. Mix of credit (~10%): The more types of credit you have, the better for your score. There are two types of credit for these purposes: “installment loans” (loans for set amounts like mortgages or student loans) and “revolving loans” (products that you can use to borrow continuously such as credit cards, retail cards, or a line of credit from a bank). Inquiries (~10%): If many creditors have requested your credit report, it can count against your credit score. Only “hard” inquiries, where creditors are requesting your credit report because you have requested a loan, count for this purpose. You checking your credit is a “soft” inquiry. You might have already guessed who is likely to have “good credit” and who “bad credit”. Poor people and people facing economic uncertainty tend to have lower credit scores. People of color are disproportionately affected by economic uncertainty and have historically been prevented from accumulating enough wealth to buffer them from the worst impacts of this uncertainty. This is reflected in credit scores. About 42% of Latinx and nearly 50% of Black people in the US have credit scores below 660, compared to around 20% of White people.

How to get a copy of your credit report (and score)[edit]

Under the Fair Credit Reporting Act (FCRA), you have a right to one free credit report per year from each of the Big Three CRAs. To comply with this requirement the Big Three CRAs put together (not “”—that’s a site run by Experian that could convert your free credit report into a paid service and/or barrage you with offers from credit card companies). You can also mail your request in with this form

You also have a right to an additional copy of your credit report if:

You are unemployed and will be applying for a job in the next 60 days. You receive public assistance. You believe there is an inaccuracy on your credit report due to fraud/identity theft. You have been denied credit or a job or anything else because of your credit in the past 60 days. To get your credit report for one of these reasons, you have to contact the CRAs individually: Transunion, Experian, Equifax.

You do not have a right to a free credit score. Remember, you have multiple credit scores, and any that you see might not be the one creditors are relying on.

If you need to see your credit report more than once in a year or you want to see your credit score, but you don’t fit into those categories, you have a couple options.

You can pay one or more of the CRAs for your credit report or score:,, It’s not that expensive, but we understand if you don’t want to give these spymasters your money. Some companies now offer access to your credit report (or at least your credit score) if you sign up with them. Some credit cards come with this feature. Check out this list created by the CFPB. As well, Credit Karma allows you to view a version of your credit score for free so long as you’re willing to let them select advertisements for you.

Disputing your credit report[edit]

If you see something on your credit report that isn’t right or that is inconsistent (or you just want to annoy them or you want to get something off your credit report that shouldn’t be in there because you should not have had to take out debt to pay for groceries, for example), you should dispute it with our CREDIT REPORT DISPUTE TOOL.

You have a right to have inaccuracies corrected under the Fair Credit Reporting Act (FCRA). But CRAs don’t want to spend the time correcting things they're supposed to and they see creditors as their customers, so they are unlikely to make it easy for you. Our tool will help you take them on, but you can also rely on the support of other debtors and allies in fighting and winning your disputes.

Sometimes even after you’ve had something corrected or taken off your credit report, it will go back to being incorrect. Make sure to keep checking your credit report and to dispute it again if they put it back on!

You should also report inaccuracies and failures to correct them to the CFPB and/or the FTC (they share with each other).

Watch out for scams![edit]

There are a variety of “credit repair” companies out there who claim to be able to add some points to your credit score or get some trade lines off of your credit report. These are mostly scams. They are charging for things that you could do yourself or with the help of other debtors for free. And often they don’t even do what they say they will.

There is no magic bullet to “repairing” your credit. Don’t let anybody sell you otherwise.