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.
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.
The Julianos are at the Gaithersburg Acura dealership applying for a lease. There's a small problem, the salesman says. We'll approve the deal, but you need to know that your credit report contains an outstanding bad-debt court judgment.
They checked the courthouse. A judgment had been entered against them for the hospital bill -- even though they paid it. But it had been dismissed a few weeks later, which court papers confirm.
They called Atlanta-based Equifax, one of the major credit-information services. OK, Equifax said, according to Mrs. Juliano. We'll remove it.
It's March 1993. Mrs. Juliano is applying for a bank loan to extinguish the lease on her Mazda RX7. There's a difficulty, the bank manager says. You have a live judgment on your record.
"That's when I started being beside myself," Mrs. Juliano said. "I started getting extremely upset."
Not only had the hospital judgment returned, but a bank was reporting that Mrs. Juliano missed a car-lease payment a few years previously. It was another mistake, confirmed by bank papers correcting it.
She called the credit bureau. The bureau agreed to remove the errors, she said.
It's September 1993. Mortgage rates are scraping 6 percent, and the Julianos want to refinance at a low, fixed payment. They time the rates just right. They apply. They lock in. The mortgage company checks their financial data.
The hospital judgment still stained their credit reports, their mortgage broker told them. The broker, Norma J. Gay of Carlton Mortgage Corp., confirmed Mrs. Juliano's account.
Loan rejections piled up -- four or five in all. Meanwhile, rates were bouncing up again. "We don't lend to people with judgments against them," mortgage lenders told the broker, Mrs. Juliano said.
"I just went nuts," she said. "I called Equifax. I literally was screaming. I said, 'Get this off my record! What are you doing to me?' "
She never did get the fixed-rate mortgage. The Julianos settled for an adjustable loan, landed in 1994 after the refinancing bustle had died down and mortgage lenders had become less picky.
It's 1995. Mortgage rates have fallen again. Here's a second chance for the Julianos to refinance, an opportunity to sweep away the headaches of 1993.
Surely the bad data is off their files now, they think. After all those calls, letters and explanations -- of course it's off. But maybe first they should make some routine checks
They didn't even bother to ask for a loan. In phone calls, TRW, Equifax and Trans Union all told Mrs. Juliano that the hospital judgment was still on their record, she said.
She hired a lawyer, called the Maryland financial regulation department and sued TRW and Equifax, claiming she and her husband lost thousands when they were unable to secure a low-rate, fixed mortgage in 1993.
Other, less damaging mistakes also keep appearing on the Julianos credit reports, they said: a Hecht's account that was closed years ago; duplications of their car loans; an incorrect notation that Mr. Juliano worked for the Buffalo, N.Y., school system.
The suits are pending. But in a letter last year to H. Robert Hergenroeder, Maryland financial regulation commissioner, TRW admitted listing the hospital judgment in 1994 and blamed a date discrepancy in reports supplied by the court or a local court-data reporting service.
"We deleted the judgment from both Mr. and Mrs. Juliano's credit reports," a TRW coordinator stated in the letter. "I sincerely apologize for any inconvenience the Julianos have experienced."
Trans Union also agreed in writing to remove the judgment, Hergenroeder said. Equifax did not admit ever listing the hospital judgment incorrectly and said in a letter to Hergenroeder that "the disputed judgment is not being reported."
An Equifax spokeswoman said the company does not comment on pending litigation.
One lesson from the Julianos' case is that they probably waited too long to seek help from a lawyer or state regulators, consumer specialists say.
All three credit agencies responded with letters on the Julianos' files within weeks of being contacted by Maryland regulators. And regulators confirm the agencies' statements that they've significantly improved their software to eliminate bad data.
"We get excellent response from these credit reporting agencies," Hergenroeder said. "They fear a regulatory environment, so they are very responsive to requests that come from a state agency."
But organizations like USPIRG are still pushing for legislative update. It's still too easy for bad data to get into people's credit files, Mierzwinski said. Sometimes people who check court and other public files for credit agencies get information wrong, he said. Sometimes computers mix information from two consumers with similar names.
Recurring bad information "definitely occurs thousands of times," said. "It's definitely the worst problem. I'm convinced that the credit bureaus' computer architecture tends to retain this information, and the Julianos' case supports my thesis."
State law as model
Consumer groups want federal law to offer similar protections to those found in Maryland. They would make the agencies supply consumers with free copies of their records once a year and would require errors to be fixed within 30 days -- both required here.
They also would allow consumers to sue creditors that supply incorrect information -- banks and stores -- and not just the credit agencies themselves. And they would allow states to enact stricter standards than the federal ones.
But "a lot of what's contained in the Senate bill, the market is already doing," responded Norm Magnuson, spokesman for the Associated Credit Bureaus, a trade group.
"We sell the reports now for $8. We will [conduct an investigation] within 30 days and respond to the consumer. We have a complaint resolution process that's been automated 15 months."
Bureaus are drastically revamping their software, he said. "You have a lot of efforts on the accuracy front," he said. "That's not to say there aren't some files out there that have errors in them."
A bill tightening federal credit-report law is currently attached to a U.S. Senate measure revamping financial regulations. Senate staff member Vermilye said he's slightly optimistic that Congress will pass the law; Magnuson thinks not.
Whatever Congress does, the Julianos have come up with their own strategy for coping with credit hassles: They try not to apply for it in the first place.
"We have literally paid off every loan," Mrs. Juliano said. "We have our mortgage. We have an equity line of credit that we are paying down as rapidly as we can. We don't have any car loans right now. We don't have anything. We have two credit cards that we use. American Express -- pay it off every month. And the USAir frequent flier card -- pay if off every month."
As for the Howard County General Hospital judgment, the credit agencies promise that it has been impaled with an oaken stake, that it's gone for good from the Julianos' records.
Mrs. Juliano, still waiting to exhale, isn't so sure.
"What guarantee do I have?" she said. "They told me it was gone before. Let's hope so."
How to get help
If you have a complaint or question about your credit file, or you want a free copy, all three major credit reporting agencies have toll-free numbers specifically for Marylanders.
"We asked the companies to do this, and I have to say they cooperated," said H. Robert Hergenroeder, commissioner of financial regulation for the state. "The consumer will get a live person, and that has reduced the complaints" that state regulators get.
lTC Maryland law requires the agencies to furnish by request a free yearly copy of a consumer's credit file and to investigate complaints within 30 days.
* TRW. (800) 422-4879. Requires a written request for the free report unless you've been denied credit as a result of something in its file. Then you can request the file copy by phone.
* Trans Union. (800) 516-8289. Any Marylander can request a free copy by phone.
* Equifax. (800) 807-3848. Any Marylander can request a free copy by phone.
If you can't resolve the complaint through the agencies, call Maryland's financial regulation department at (410) 333-6830.
Pub Date: 7/21/96