A Cancer on their credit Errors: Lynn and Paul Juliano were victims of bureaucratic miscues and errant information that scarred their credit reports. The mistakes cost them time, money and caused plenty of aggravation.

July 21, 1996|By Jay Hancock | Jay Hancock,SUN STAFF

Maybe they need an exorcist. Just when Lynn and Paul Juliano think it's finally safe to apply for a loan, they cease being happy suburban consumers and enter a scene from a cheap horror movie.

Their bad guy doesn't have horns or a hockey mask. The bad guy is a mainframe computer in Allen, Texas, as relentless and inscrutable as anything Stephen King could think up.

The Julianos are serial victims of a seemingly freak alignment of bureaucratic miscues, errant software and databases with the bulk and memory of elephants. False information keeps scarring their credit reports, despite their repeated attempts to excise it, despite promises from the database companies to desist.

One hardy morsel of bad data survived five years and at least three attempts to kill it. The Julianos have paid in loan rejections, much money and more aggravation.

"I just don't know what else to do. I've wasted a year of my life," Mrs. Juliano said recently. "This has been an unbelievable experience."

Not really, say consumer advocates. They believe it.

Although regulators have pressed credit agencies to shape up in recent years, "I talk to consumers all the time who still face the nightmare on credit street," said Edmund Mierzwinski, consumer program director for the U.S. Public Interest Research Group. "The credit bureaus continue to make mistakes. I think the problem is just as serious as it always was."

Credit agencies argue strenuously that they've improved their computers and set up better complaint-resolution systems. But stories like the Julianos' show the need for legislative reform, say pro-consumer groups that are again pushing a bill that would change laws governing the collection and sharing of personal financial data.

Outdated laws

Existing laws are a quarter-century old and have been left in the dust by technological change and the explosion in consumer credit, they argue. Federal law doesn't allow enough consumer access to credit reports, they say. It doesn't let people sue stores and banks that unjustly sully their records. And it places the burden of fixing incorrect information more on the consumer than on the credit agency.

Many watchdogs concede that credit agencies have improved since they signed consent agreements with state regulators a few years ago.

"I'd have to say that the heightened focus on the issue has gotten them to clean up their act to a good extent," said Andy Vermilye, legislative director for Sen. Richard H. Bryan, a Nevada Democrat who sits on the Senate Banking Committee. "But we still think the legislation is needed."

The large credit reporting agencies -- TRW, Equifax and TransUnion -- don't claim they or the 1970 Fair Credit Reporting Act are perfect. Connected to government agencies, lenders and other creditors, they act as nationwide clearinghouses on credit histories and have helped facilitate the boom in consumer credit over the last 20 years.

The agencies and other critics fault the reform bill now in Congress as a sop to trial lawyers and costly over-regulation that would allow a hodgepodge of standards from state to state.

"We are in favor of a new, updated [Fair Credit Reporting Act], but one that has uniform standards across all 50 states," said Janis Lamar, spokeswoman for TRW. "The industry is doing a good job of filling voids in the existing law, and we often go way beyond the law in our policies."

Lynn Juliano, who has sued TRW and Equifax, says the current protections didn't work for her.

"You personally are not protected by the Fair Credit Reporting Act unless you have $40,000 to take somebody to court and have about a year of your time to spend," she said. "There is nothing fair about it."

Tale of woe

Like any good horror yarn, the Julianos' opens with idyllic mundaneness darkened by unseen menace.

He's a commercial carpet salesman, 40. She's a free-lance writer, 41. They've earned a six-figure income for years. They live in a beautiful gray Columbia contemporary. They drive nice cars.

And while they've taken ample advantage of the world's credit opportunities, their financial history is sound. A late check here and there. A bill unpaid because of bad merchandise. Never a foreclosure. Never a bankruptcy.

The first symptom of chaos, Mrs. Juliano said, was a summons-bearing police officer, standing on her doorstep in the spring of 1990. She owed Howard County General Hospital several hundred dollars, the papers said.

She had indeed been hospitalized for three days in 1989. But she insists that she received only one bill and assumed insurance had covered it when no others came. Hospital controller Leo J. DeLeon says the Julianos probably got several months' worth of bills and even were left three separate answering-machine messages asking them to pay up.

Whatever the case, all parties agree that the Julianos paid the $313 bill in April 1990. Then they forgot about it.

Now it's 1991.

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