Book Gives Insight Into Credit Reporting

The U.S. credit reporting system is one heck of a story. Small, local, paper-based credit reporting companies morphed over several decades into a few large, mostly publicly owned, computer-based organizations with dozens of lines of business exploiting information on most American consumers.

The story comes with stars and villains (often the same business people), out-and-out crooks (identity thieves and credit repair clinics), would-be rescuers (legislators and regulators) and often-innocent bystanders (consumers).

The growth of credit reporting also parallels the growth of the information economy in the last half of the 20th century and the integration of information technology into our lives. No one has written a proper history of credit reporting, and the subject cries out for serious treatment.

Today’s book is not that history, but it does offer a comprehensive current look at credit reporting and allied activities, together with some history and policy. Evan Hendricks, publisher of the Privacy Times newsletter and a longtime privacy activist, just published “Credit Scores & Credit Reports: How the System Really Works, What You Can Do.” Ordering details are at or at Privacy Times’ Web site,

The book’s main feature is an instruction manual for consumers on how the credit reporting system works. A credit report is a consumer’s passport to economic activities. Credit reports affect whether consumers can obtain credit, what price they pay for credit cards, car loans and mortgages, whether they can find employment or insurance and, maybe, whether they can get on an airplane.

The book is a step-by-step, realistic guide to addressing credit reporting problems, with no hype or magic cures. Consumers have more rights than in the past, but it isn’t always easy to exercise those rights. Hendricks describes the system accurately, and he tells consumers what is and is not possible. Though all consumers will learn from the book, credit grantors and others who interact with the credit system as users of credit reports also will benefit from an overview of this ornate system of obligations and institutions.

The book comes as the law regulating credit reporting is changing. The Fair and Accurate Credit Transactions Act of 2003, known as FACTA, is beginning to take effect. Later this year, a major provision of the act will give consumers a free credit report once a year. There are many other pieces of the FACTA puzzle, and Hendricks includes the latest iterations of law and regulation.

The book does a particularly good job in describing credit scores, a relatively recent development. Credit scores gained fame because of their use in mortgage lending, but insurance companies now use scores for auto and homeowners insurance. Further developments with credit scores and other predictive consumer scores are certain.

“Credit Scores & Credit Reports” also offers guidance on identity theft, credit repair, credit counseling and credit re-scoring.

Trying to improve your score is a complex and often counterintuitive activity. For example, Hendricks notes that paying an old debt may have a negative effect on a score because it will make more “recent” a debt that might otherwise be ignored. Other techniques may yield better results, but everything is more complex than the illegal credit repair clinics would have you think.

Readers also will find an abundance of references to Internet documents from agencies, credit bureaus, hearings and court cases. Those with a pressing need to pursue their rights will find these references useful, yet disheartening. They show how difficult it can be for a consumer to make the credit reporting system respond to problems.

I was surprised that Hendricks did not send readers to his Web site for more information, links, corrections and updates. Because regulation is ongoing and changing quickly, he should use the Internet to update readers between editions. Still, most will find plenty of information within the book’s covers. Readers will walk away with a readable, detailed and useful guide to a complex industry that affects their lives in more ways than most would have thought.

I want to bring another book to your attention. Robert Ellis Smith, perhaps the dean of privacy writers and activists, is publisher of the Privacy Journal, a monthly newsletter. I once reviewed in this space his “Ben Franklin’s Web Site,” still the best and most readable all-purpose introduction to privacy history, policy and law.

One of Smith’s other publications is the “Compilation of State and Federal Privacy Laws.”

Finding state privacy statutes today seems easy because all state laws are available on the Internet. However, it can be maddeningly difficult to look through any state’s code to see whether it has a law on a specific topic. Privacy laws affect financial, credit, medical, surveillance, education, employment and other types of records or activities. It helps if you know whether a law exists and where to find it. “Compilation” gives a general description of each privacy law in every state, along with a citation to that law.

You can find ordering details at You can even download the text. Everyone who deals with privacy law, even occasionally, will find the compilation useful. This book is a wonderful addition to your privacy reference shelf.

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