TRW Will Offer Consumers Free Report on Credit : Finance: Under fire for embarrassing errors in its data, the company will give people one copy a year so they can check the information for mistakes.
TRW Inc., facing intense criticism for embarrassing mistakes in its giant credit-reporting business, said Monday that it will offer consumers a free credit report once a year beginning in 1992.
The move by TRW will make it easier and cheaper for consumers to check for errors in their credit reports--which include details of an individual’s financial history and are used to decide whether loans are granted. TRW said its decision to provide free reports to anyone who requests them by phone or mail is a sign that the company is becoming more consumer-oriented.
“We have concluded that by making consumer credit reports more widely available, the credit-reporting industry will improve its ability to maintain accurate records,” said D. Van Skilling, executive vice president of TRW’s information systems and services division in Orange. “This move is an important step in the evolution of the credit reporting industry.”
The announcement followed TRW’s admission Monday of another reporting problem. The company said it may have mistakenly included erroneous tax lien information for some residents of two New England states. TRW said the problems in Vermont and New Hampshire were unrelated to the decision to offer the free credit reports.
Consumer advocates praised TRW’s action, which comes as Congress is reviewing several bills that would require credit bureaus to provide free reports to consumers. The nation’s other two major credit-reporting services, Equifax Inc. and Trans Union Corp., said they had no immediate plans to follow TRW’s move.
TRW sells about 300,000 credit reports annually to consumers, who pay $8 per copy in California and $15 in most other states to find out whether their financial histories are accurate and complete.
TRW was sued by the attorneys general in 13 states earlier this year for allegedly shoddy practices that included mixing up information among the 170 million Americans in its database and failing to properly monitor the accuracy of its files.
TRW, Equifax and Trans Union, which together control about 90% of the industry, have opposed moves in Congress to require them to supply free credit reports to consumers. Under current law, consumers are entitled to free reports only if they have been rejected for credit.
Credit-reporting services have argued that it would be too costly to supply free copies of credit reports to all of their customers. In 1989, the then-head of TRW’s credit bureau operations told a House subcommittee that even the $15-per-report nationwide fee is not enough to cover costs. Vice President Edward A. Barbieri said TRW lost $8 million in administering consumer relation programs in 1988 alone.
But consumer groups have complained that creditors are charged only pennies to get copies of credit reports. Even so, those groups said Monday that TRW’s action as a big step forward.
“If consumers can look at their reports for free to identify errors, that’s important,” said Ed Mierzwinski, a consumer advocate for the U.S. Public Interest Research Group in Washington. “This is a central part of the consumer privacy platform, but if it’s designed to derail legislation, it’s not good enough.”
Senate and House consumer affairs subcommittees are planning separate hearings this week and next on how to reform the Fair Credit Reporting Act that governs credit bureaus, the most recent in three years of hearings on the issue.
Rep. Esteban E. Torres (D-La Puente), chairman of the House panel, said he plans to introduce legislation later this week that would require credit bureaus to send consumers free credit reports once a year upon request.
“We have to make sure the rest of the industry follows in this vein,” he said.
An Equifax spokesman in Atlanta said the company might consider reducing the costs of mailing a report to consumers but is not prepared to provide them free of charge. Trans Union officials said they are studying TRW’s move but had no immediate comment.
Priscilla Luce, a spokeswoman for Cleveland-based TRW, said the company will continue to offer two credit-reporting services for which fees are charged. The company’s Credentials and Monitor services allow consumers to receive an unlimited number of copies of their credit reports annually.
TRW has not decided exactly when it will start offering the free reports. Luce said the decision will be made by January.
If consumers are denied credit and receive free copies of their reports as allowed under current law, Luce said they will be still be entitled to get their annual free copy if they request it.
In the New England case, TRW said it is expunging files of tax lien information in Vermont, New Hampshire, Maine and Rhode Island. There have been no reports of problems in Maine and Rhode Island, but the same company, National Data Retrieval Inc. in Georgia, supplied tax lien information for all four states. Such errors can be grounds for rejection of credit cards or loan applications, or disqualification from certain jobs.
TRW fired National Data last week after errors started appearing in the credit records of people in Woodstock, Vt. Earlier this year, the Georgia firm was blamed for erroneously reporting tax liens on 1,400 residents of Norwich, Vt., a TRW spokesman said.
Getting Information Beginning in 1992, TRW Inc. it will provide consumers with one free copy of their credit report each year. To get their free credit report, consumers must call or write to TRW. In the past, such documents cost $8 for California residents.
Credit reports include identifying information such as name, address, social security number. They also list all of a person’s financial history, including credit cards, loans, late or non-existing payments and public-record information such as liens and bankruptcies.
Here’s how the company’s credit-reporting system works:
Consumer Data Information on consumers is compiled from two bodies of data: 1. Credit account information provided by retailers and banks: Credit cards Loans 2. Public record information from courthouse records on: Bankruptcy Tax liens Judgments Foreclosures TRW Information is input and stored in a database and sorted into individual files for each consumer. Creditor A consumer’s credit is checked when purchasing a major appliance, automobile or home on credit. The creditor contacts TRW and gains access to information in the database, which is only available to a credit granter who has a legitimate transaction with the consumer. Source: TRW Inc.
Other TRW Services TRW’s move to provide consumers with free credit information will not affect its other services, which include:
* Credentials: $39
Unlimited copies of an individual’s credit report upon request.
Notification when a creditor, such as a department store or car dealer, has accessed the consumer’s credit report.
Helps consumers create a personal credit profile that they can use when applying for loans.
Includes a newsletter sent to consumers’ homes.
* Monitor: $20
Unlimited copies of their credit report upon request.
Notification when a creditor has accessed the consumer’s credit report.
* Watch: $19
Notifies a consumer when negative information is put on their credit report.
** Coming in 1992
TRW plans to establish a toll-free telephone number for consumers who have been denied credit and want to request a free copy of their credit report, as required by law.
