Credit scores are used in many parts of our economy. The score can have a direct impact on the types of loans you qualify for, but not everyone is happy with the current system.
"I'm not a real big fan of the credit bureaus," said Ira Rheingold, an attorney and Executive Director of the National Association of Consumer Advocates. "Your financial information, your personal information, becoming a commodity that they make money on really is wrong."
NBC 7 has reported that mistakes can be very common in credit reports. That's one reason financial experts say you should regularly check your credit. People in finance say because it is tracking your accounts for years, there a greater chance for errors.
"If there are errors on credit reports and that's feeding into the credit score, we want to correct that," said Doug Wright, the CFO of Mission Federal Credit Union. "It's a process that's easier now, it's gotten better of the years, but it can still be a cumbersome process."
Those errors can hurt your chances at qualifying for certain loans or deals. Wright says credit scores aren't the only factor used in approving loans, but they're helpful.
"It allows us to speed up the application and approval process," said Wright. "Lenders use the scores as part of their decisioning process in making credit available to consumers."
Wright says there's frustration with the current system because of errors, data breaches, or because the process is not clear. That's why Rheingold says it's time to look for alternatives to the big three credit bureaus: Equifax, Experian and TransUnion.
In a policy proposal put out during the campaign, the Biden team proposed the creation of a public credit reporting agency. It's an idea that Rheingold thinks would help.
"I think it's a good idea," said Rheingold. "Do I think we are close to that happening? No, I don't think so."
One reason is that it would take a lot of work to get a program like that up and running. Another is that it's a new idea that still has a lot of questions.
"The idea to abolish the credit reporting agencies and create a government run entity is relatively new," said Wright. "We just don't have enough details on how they would propose to change the process, or do things differently, to assess whether it's going to be an improvement or not."
Rheingold says there definitely needs to be changes to the current system. He says it's hard for consumers to stand up for themselves.
"Getting something fixed or changed is really difficult for the average consumer," said Rheingold. "If you want to apply for an apartment, if you want a mortgage, you should be the person who says, 'Here is my information.' You don't need to have companies reviewing you and looking at you without your consent."
Wright says it's not feasible for financial institutions to run their own individual credit checks that are as exhaustive as current credit reports.
"It would certainly slow down credit decisions," said Wright. "It would probably also limit the amount of credit we could provide to consumers."
Instead of abolishing the agencies, Wright says he expects more changes and reform to come to the process through the Consumer Financial Protection Bureau. However, Rheingold says the ultimate protection would be completely changing the system.
"If we want to get back to respecting people's privacy, to giving people control of their private financial information, then you're really going to need to create some sort of public utility," said Rheingold.