Published May 17, 2011 | FoxNews.com

Sen. Dick Blumenthal wants explanations from the three credit rating bureaus about a New York Times report about a VIP list they allegedly keep that favors the rich and famous over everyone else.

The Connecticut Democrat wrote a letter Monday to Equifax, Experian and TransUnion about the reported separate system in which errors and disputes are resolved faster and with more attention than with other consumers, who must rely on an automated system and outsourced customer support to clear up mistakes.

“I am deeply troubled by the implication that your companies are neglecting the majority of consumers and providing preferential treatment for wealthy, famous or well-connected persons, and I ask you to confirm or deny these reports and provide more information on your dispute resolution process,” he wrote in the letter.

I talked with a member a couple days ago that was totally frustrated with the credit bureaus and the whole credit scoring process.  Hmmmm…sound familiar?

Jack’s situation was that he had paid off several bills with a bonus check from work about 10 days ago.  He had called the three credit card companies involved and verified he had indeed posted the payoffs which totaled almost $6000.  He then had his mortgage broker pull a new credit report thinking he would have the increase in credit score that he thought the payoffs would give.  He only needed about 17 points to qualify for this loan but was told that his scores had actually gone down 2 points from a month prior.

Well this is what prompted Jack’s call.  He was confused and upset that he had read something I wrote previously about how FICO computes credit scores.  He thought that by freeing up his credit lines and paying down the debt would help his credit scores.   Was he right?

The credit reporting agency, Transunion settled on a class action lawsuit by setting aside 75 million dollars nearly 2 years ago.  Now, this amount is but a drop in the bucket and a baby slap on the wrist for this particular credit bureau but that discussion is for another day!

The reason if you’re not familiar should knock your socks off, make you down right red eyed with blood rising to your head causing those vessels to bulge. Why? 

Why would anyone be interested in reading about credit report collections? Well, most the time it’s because you have been denied credit and have ordered the credit report to see what’s going on.  Low and behold many times there are collections on your credit report.  These collections are being reported by collection agencies and they’re killing your credit scores!

When someone researches their credit report for problems and finds collections, usually the immediate response is to begin looking for ways to correct or remove those items from their credit report. The good news is there are a few ways. The most popular way is by disputing them with one of the 3 main credit bureaus (Equifax, Trans Union and Experian) that are reporting them.

You can also contact the collection agency directly and try to…

Credit repair is absolutely boring, tedious, monotonous, tiresome, troublesome as well as down right infuriating!  Oh, and did I mention you’d better be “Johnny on the spot” when it comes to follow up and knowing what the rules of engagement are when it comes to the credit bureaus!

Are you having fun yet?

I get a kick out of the folks that say you can do this yourself.  The truth is you can but the better question might be “should you try and perform credit repair yourself?”.

In today’s market place there are three major credit bureaus: Equifax, Experian and Transunion.  You’ll also find many smaller agencies that act as “affiliates” of one of the big 3 like CSC and CBCInnovis or others that service their local geographic area but have less than complete national coverage.

There are other companies like ChoiceData that act as sales agents that sell credit data that is supplied by one of the big three credit bureaus.  In addition, many companies like Credco and Kroll actually a whole army of these type companies act as a “broker” buying and selling your credit data.  Finally, other companies are consumer reporting companies as defined by federal law but let’s not confuse these with CREDIT reporting agencies.  Companies like LexisNexis and Intelius are in this category.

Now this can become quite confusing and quite frankly seem like a pretty crowded market place but follow me on this point…

A discussion on a well guarded secret to keep your credit scores suppressed…

One of our consultants popped in yesterday afternoon to drop off a deal (a good thing).  He was telling me of a situation he ran into and wanted to know what kind of an effect it could have on his prospects credit score.

Well the situation was a $110k line of credit which had a balance of 96k.  This particular credit line was rated R-1 paid as agreed.  A perfect rating, right?  or was it?

Unfortunately we see this kind of thing all the time…