|Interview: Evan Hendricks
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you think people realize they are not really preapproved?|
|Credit scores & credit reports|
I don't think people appreciate the fact that preapproved does not mean preapproved.
When they send you that so-called preapproved offer, they always have a right
to run one last check. And worse, there's what they call a "counter-offer
loophole." In that preapproved offer, if you respond and say "yeah,
I want this card at this attractive rate," they can send you a card that
has a higher interest rate and only tell you about it in the fine print. Then,
if you accept that card and activate it, you've accepted the counter offer. Most
normal people really wouldn't be expecting to find in the fine print that oh no,
I didn't get the 6.9 percent they offered me, I got a 13.9. It's a very tricky
does not mean preapproved.”
just think that while credit cards are this wonderful, convenient thing that allows
us to go out and buy stuff -- even if we might not have the cash in pocket --
a smart consumer would have a very low trust level for credit card companies.
Credit card companies basically do best the higher the interest rates they can
charge and when they have several reasons to charge higher interest rates. You
just can't be very trusting when it comes to credit cards.
problem of mixed files
In your book, you talk about the problem of mixed files. Could you briefly discuss
what they are and how they can wreak havoc on consumer credit reports and scores?
mixed file is when someone else's information comes on to your credit report.
It can wreak havoc because if you have good credit and the other person whose
information is coming onto your credit report has bad credit, those bad accounts
-- or tradelines as they're called in the industry -- are going to lower your
And, if you try and dispute this and correct
it, it doesn't always work, mainly because the system is so automated. Sometimes
the dispute process works, but it's so automated that sometimes the computers
look at your dispute and wrongly verify the information without doing a really
good investigation. You get a letter back saying the credit agency verified this
information, when in fact it verified false information. And that wreaks havoc
on people because then they have to dispute again. And then finally, even if the
dispute does work, it could come back on your report. There have been cases where
because of the way information is routinely reported every month by the big creditors
to the credit bureaus, the word doesn't really get back to the creditor who's
doing the original reporting and so, they don't take the bad information out of
their computer systems that do the reporting every month and so in another month
or two, it can be back on and you won't know about it.
The only way you'd
know about it is by getting another copy of your report and finding out that "oh
gosh, it's back on again."