Monday, June 27, 2011

2011 College Grads Moving Home In Record Numbers, Saddled With Historic Levels Of Student Loan Debt

While one's college graduation is normally a time of jubilation, Megan Muller can more than relate to the sense of defeat that now hangs over the class of 2011. Muller, 26, graduated from Kean University in Union, N.J., yesterday with a bachelor’s degree in communication. She is the first person in her family to graduate from college.

Like many graduates, she's now faced with the larger worry of living back at home while also paying down vast amounts of debt. All along, money’s been a chronic source of anxiety. In order to finish, Muller took out more than $70,000 in student loans and has another $10,000 in credit card debt.

Midway through college, after transferring and taking a few semesters off, Muller moved back in with her parents in order to save money. And until she can move out and find her own place, it’s the credit cards she must first pay down -- in addition to beginning repayments on her student loans. “Trust me, you don’t want to be 26 and still living at home with your parents,” explains Muller, who, daunted by the expense of college, struggled with whether to finish at all. She currently makes about $25,000 as an assistant editor at Federal Practitioner, a peer-reviewed medical journal.

Muller is hardly alone in her ongoing quest to establish an independent life. In addition to the normal job worries, the class of 2011 is saddled with a dual set of other obligations: moving home and paying back debt.

A study conducted by Twentysomething Inc., a consultant firm specializing in young adults, reports that 85 percent of this year’s graduating class will be forced to move back home. Meanwhile, 2011 graduates also face historic amounts of student loan debt -- or an average of $27,200 for graduates that borrowed money in order to finish school.

“We tell people they need to get a college education in order to succeed, but then we put all of these roadblocks in their way by then making it practically impossible to repay what you owe,” says Michael D. Hais, who, along with Morley Winograd, coauthored the forthcoming book “Millennial Momentum: How a New Generation Is Remaking America.” The two men describe the number of 20-somethings moving home as “historically unprecedented.”

Andrew Sum, a professor of economics at Northeastern University, couldn’t agree more. “This is our country and this is our future and we’re failing them,” says Sum, who reports a record number of 2011 graduates returning home to their parents' nest. As a consequence, Sum sees young graduates not only delaying the formation of their own households, but consequently unable to achieve a desirable standard of living.

Apart from the longer-term consequences associated with moving home, Sum’s data reveals another concern altogether. Namely, that young people face high amounts of debt and a lack of decent jobs. Using data from the U.S. Bureau of Labor Statistics, Sum reports that as many as 50 percent of college graduates under the age of 25 are underutilized, meaning they’re either working no job at all, working a part-time job or working a job outside of the college labor market -- say, as a barista or a bartender.

Mark Kantrowitz, who came up with the $27,200 figure based on the National Postsecondary Student Aid Study and publishes the financial aid sites Fastweb.com and FinAid.org, is concerned that debt at graduation is outpacing starting salaries. It’s a worry that Muller and many of her classmates also share.

Going to school while working full-time required that Muller learn to survive on fewer and fewer hours of sleep. Coffee became her fuel. Name the job -- whether working as a nanny, as a waitress, behind the counter at a beauty supply store or at the front desk of her local gym -- and she's done it. And while Muller realizes she’s fortunate to have a job, her paycheck is hardly enough to repay her existing debt while she saves to get her own place.

Meanwhile, Muller is toying with whether to go into more debt in order to finance a graduate degree, hoping that more qualifications might lead to a bigger paycheck. “But so what if I’m $100,000 in debt and living in a smaller house and not able to afford the nicest clothes?” asks Muller, whose to-do list remains longer than her shopping list, despite yesterday's high of finally receiving her diploma. “One day, it’s all going to pay off.”

If you feel like it isn’t paying off, if you are in trouble and need help now, LET US KNOW, fill out the form below and Credit 911, can and will HELP YOU! (take a look at our article Settle Student Loans with Credit 911! for examples of actual STUDENT LOAN settlements)

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Dick Durbin: Banks "Frankly Own The Place"

by Ryan Grimm

Sen. Dick Durbin (D-Ill.) has been battling the banks the last few weeks in an effort to get 60 votes lined up for bankruptcy reform. He's losing.

On Monday night in an interview with a radio host back home, he came to a stark conclusion: the banks own the Senate.

"And the banks -- hard to believe in a time when we're facing a banking crisis that many of the banks created -- are still the most powerful lobby on Capitol Hill. And they frankly own the place," he said on WJJG 1530 AM's "Mornings with Ray Hanania."

Earlier Wednesday, Senate Majority Leader Harry Reid (D-Nev.) told the Huffington Post that the most important provision of bankruptcy reform -- the authority for a bankruptcy judge to renegotiate mortgages, known as cramdown, which banks strongly oppose -- could get ripped out of the bill. Speaker Nancy Pelosi (D-Calif.) pushed back, saying that a bill without such a provision wouldn't be reform at all.

While Durbin has been negotiating with individual banks over the last several weeks, bank lobbyists and Senate Minority Whip Jon Kyl (R-Ariz.) have been whipping up opposition to it. A growing number of Democrats have announced opposition to cramdown, including Ben Nelson (Neb.), Mary Landrieu (La.) and Jon Tester (Mont.).

"There's been a tendency on the part of some who are advocates for the legislation to overestimate the number of votes in favor," said Sen. Evan Bayh (D-Ind.). "When I was actively involved at the moment it broke down it was my impression there were no Republicans who were willing to support it and at least a few Democrats have stated openly on the record that they were in opposition. How you get to 60 with those numbers is a mathematical problem."

Credit 911’s Comment:

It really is quite something that the same Banks that were recently begging for bail out money because they were crumbling are still the most powerful lobby in Washington. In short this pretty much means that our political system will bend over backwards to do what the Banks, not the consumers they hurt in the first place, want and need. It’s a frightening world we live in today.

Tuesday, June 14, 2011

The Expensive Student Loan Trap

by Marlys Harris

Making its way through Congress (at the usual pace–ketchup coming out of a bottle) is a bill that promises to reform student loans. Called SAFRA for Student Aid and Fiscal Responsibility Act, it would eliminate FFELP or Family Federal Education Program loans. (Doncha love the acronyms?) The bill would knock out bank middlemen who take no risks in making the loans. (The government guarantees them.) Instead, the federal government would lend the money directly to students, saving an estimated $87 billion over the next ten years.

Plunging into Bankruptcy - Financial Speedometer

That’s nice — if it passes. But Congress hasn’t even nibbled at a bigger student loan problem. I’m talking about private or alternative loans. These are the ones made to students and their families outside the federal programs. Key players include Sallie Mae, once a government but now a private lender, Wells Fargo, Chase and Citibank.

The problem is that private loans, now utilized by 14% of undergrads (and more grad students), have almost no consumer protections. The result: Young people face a future with huge debts on their backs, debts that will take them 20 or even 30 years to repay. Here are a few of the problems:

No limit on interest. Most private loans have a variable rate as high as 18%;
No limit on origination fees. Usually they range from 3% to 4.5% of the loan;
No Schumer box, like the one used for credit card offers, that would disclose to 18- and 19-year-olds who know nothing about finance the true cost of the loan;
No way out. Lenders will not cancel or mitigate a student loan even if the borrower drops dead or becomes disabled. Any co-signer is similarly on the hook. Even if a school turns out to be a complete fraud that never provided any education, the student must repay. Student loans are not dischargeable in bankruptcy, and payments can be subtracted from Social Security payments.

Worse yet, the loans are almost impossible to amortize. Many start accruing interest while the kid is still in college; so by graduation his $30,000 loan may turn into $40,000. Say he can’t find a job or loses one; he can ask the lender for “forbearance” — a year-long delay in repaying, but, again, interest accrues so the borrower winds up paying interest on interest. And God help anybody who defaults! The cost of collection is added to the bill along with accrued interest. And, while the federal government allows borrowers to vary payments so that they’re a reasonable percentage of income, banks making private loans show no such mercy to those with modest salaries.

The Federal Reserve issued new rules to go into effect on February 10, but they are pretty wimpy. Generally, they require lenders to provide uniform disclosure of terms to prospective borrowers before they sign on. You’d think they would have done that already.

How does it all play out? Well, here’s one of many sad testimonials from former students compiled by StudentLoanJustice.org, an advocacy group:

It cost 18,000/semester to go to Washington University School of Medicine, Program in Occupational Therapy. My student loan total was 68K when I graduated…I could not find a job for 9 months. The first job I took I made 38K, living in Chicago, with a $900/month student loan payment (that’s 55% of take home pay). Sure, they let you delay your payments, but your load just grows and grows… So, now its 10 years later, after making payments for 8 years of that time (on and off due to financial strains/changing jobs/moving, etc), my loan totals are now 103K. So I paid close to $25,000 over the years and my loans have increased in total by $35,000.

College financial advisers tell students and their parents to exhaust all the federal options before taking out a private loan, and that makes sense. Two-thirds of borrowers foolishly don’t even bother to get the government aid to which they’re entitled, according to the Project on Student Debt. But the Fed loans max out at $5,500 for freshmen — leaving a gap when compared to the full cost of college, about $6,500 at state schools ($10,000 more for non-residents) and $25,000 for private institutions, according to the College Board. Parents could resort to government PLUS loans or take out a home equity loan, if they can get one, but putting themselves in hock when retirement funds and homes have dropped in value may not be a winning personal-finance strategy. Mark Kantrowitz, the brain behind Finaid.org, which guides students to scholarships and loans, suggests that students avoid over-borrowing. “If your loan is equal to your first year’s salary, you’ll probably make it,” he says. “But if it’s twice what you’re expecting to earn, you could be headed for default.”

All that’s fine for people who are borrowing now. But what about those who are already mired in a debt the size of a mortgage with the terms of a credit card? Right now there are no answers whatsoever.

Credit 911 Comment:

There WAS no answer whatsover. Now there is an answer and it’s staring you in the face! Credit 911 is able to level the playing field for once in your favor and settle those student loans by putting you into a program with a payment that you can afford. No more late fees, interest fees, and penalties, no more loans that last a lifetime. We know that education is not all about the numbers, but your student loans are!

Wednesday, June 8, 2011

The Banks Keep Stealing–Why Should You Keep Paying?

photos of wall street bankers associated with us financial disaster 11f9xin

by Dylan Ratigan

The dire straits of the middle class of America has made it near impossible for our politicians to keep up the pretense that our current government truly works for the "people." Between the multiple overt and secretive bailouts, the massive bonuses and the circular use of our tax money to lobby for these continued handouts, you can no longer hide from the evidence.

When Senator Durbin said "The banks... frankly own this place," you realize it was not in jest.

Couple this with recent protections handed by the Supreme Court to corporations to directly influence elections and it can make things seem hopeless for those not on Wall Street or their chosen politicians. Favored CEOs and now even foreign countries get all the printed money they need, leaving us paying both our bills and theirs.

And now nearly a quarter of all Americans are currently underwater in their mortgage because of that steadfast honor.

If you are one of them, chances are you didn't do anything wrong. Almost all of you were not subprime borrowers or speculators, but merely people buying a house that they thought they could afford at the time.

You were just unlucky in that you bought a house during a time when an outdated Wall Street and their complicit politicians decided to use housing to regain the income they lost due to the Schwabs and Etrades of the internet age.

You didn't cause this mess. They did.

Now you are struggling to make the same payments on this mortgage on your now overpriced home even in light of a crashing economy and massive deflation, all while the government does everything in its power to help Wall St. keep the bonuses coming.

Well, it is becoming time to take matters into your own hands... I suggest that you call your lender and tell them if they don't lower you mortgage by at least 20%, you are walking away. And if they don't agree, you need to consider walking away.

It probably doesn’t feel right to you.

That is because you probably are a good person. But your mortgage is a business deal, and it is not immoral to walk away from a business deal unless you went in to the deal with the intention of defaulting.

Wallstreet Bankers, They look like they care about you

See a face you can trust?

But somehow, even though the corporations are pumped to exercise their new rights, former bankers like Henry Paulson, current ones like Jamie Dimon and -- get this -- now even Fannie Mae execs want to keep you from exercising your rights.

But before you let them (or anyone commenting below) force you into paying that $500k mortgage on a $300k house, ask them if they'll push Jerry Speyer into "honoring his obligation" by breaking into his $2 billion personal piggy-bank to keep paying for Stuyvesant Town?

Or how about asking Hank and Jamie to lecture fellow bailed-out CEO John Mackabout how "you're supposed to meet your obligations, not run from them"?Maybe make him use some of his $50+ million for those buildings he bought inSan Francisco?

And before shaming and punishing American homeowners, did they nag Steve Feinberg about helping "teach the American people...not to run away" by writing a check out of his billion-dollar pocket to cover all the stiffed landlords and vendorsat Mervyn's? After all, at least you aren't single-handedly putting 1,100 employeesout of work when you walk on your mortgage.

As part of the deal for your house, your mortgage holder gets interest payments from you and they also use the note to your house for their capital reserves. In return, they take the risk of a foreclosure. In many states, you paid extra to have a non-recourse loan where the lender just gets the house back if you stop paying -- your interest rate would've been much lower if you were held personally liable like a student loan. But if you still feel bad, then donate the money saved to charity instead of to their bonuses. And when someone tries telling you why it is so wrong, here are some answers:

- Yes, it might seem selfish, but you are actually going to help fix our country the right way, through the use of pure capitalism. There are 3 parties involved in your mortgage -- the mortgage holders, the servicing bank and you. You probably want to stay in your house. Most of the people who actually own your mortgage also want you to stay in your house, preferring a mortgage reduction that you keep paying instead of the total loss of a foreclosure. But the major banks (BofA, Wells Fargo, JP Morgan, Citi, etc.) that underwrite and service the loans don't care about either of you. They (with the aid of their government) just care about hiding their true financial condition for long as possible so they can continue to bonus themselves outrageously. The credible threat of you walking away from your mortgage en masse is the only market-based solution that will force these banks to work with the mortgage holders on your behalf.

- No, you will not "hurt" your neighbors -- certainly not near the scale of the banksters. Chances are someone just as nice will you will move in and (unlike you) pay a fair, non-inflated price for the house. Encourage your neighbors to fight back against the banks and ask for their own mortgage reductions as well.

- Yes, it might make getting a loan harder for everyone. Considering the spate 0% down NINJA loans over the past decade, that probably isn't a bad thing.

- Yes, it might hurt your credit. But with time, people bounce back from having foreclosures on their record. Search online and then talk to a lawyer about the repercussions, which vary by state.

- No, the banks won't necessarily pass the losses on to customers. They already make a lot of money. If costs are passed on to every consumer without banks competing on price, that's a sign of illegal collusion or a monopoly. Let's fix that instead of just letting banks ruin our lives. They might, however, not all make $145 billion in bonuses next year doing something fundamentally so easy that it is an unpaid job in Monopoly.

Meanwhile, our captured government has made it clear that they want to further reward these banksters because there are clearly better ways to "save" the economy without rewarding those most responsible for the damage.

Instead of claw backs for the past theft and strong financial reform for the future, they choose to cover-up the gross misuse of our tax money, making our country worse by helping the criminals on the backs of the most honest.

But thankfully, in this country we still have the tools to fight back and regain our country. Our vote, our voice, our laws and what we choose to do with every penny we have that doesn't go to taxes are the benefits of our hard-fought freedom, and in this battle we must use them all to fight back. It's time for the citizens to once again own this place.

Credit 911’s

comment:

Need we say more? We think that the only thing that Mr. Ratigan missed is that you can and should give Credit 911 a call. We don’t like the situation any more than you do, but luckily we can and do help!

From Student Loan Consolidation to Student Loan Help and Everything in Between

Does it make sense to go to college anymore?

After looking at that chart have you thought twice about going to College yet? You are reading this post because you are having trouble paying your Student Loans and you need help.

Lets take a brief look at student loan debt and the quality of education in the United States and then we will tell you how CREDIT 911 CAN HELP:

#1 Since 1978, the cost of college tuition in the United States has gone up by over 900 percent.

#2 In 2010, the average college graduate had accumulated approximately $25,000 in student loan debt by graduation day.

#3 Approximately two-thirds of all college students graduate with student loans.

#4 Americans have accumulated well over $900 billion in student loan debt. That figure is higher than the total amount of credit card debt in the United States.

#5 The typical U.S. college student spends less than 30 hours a week on academics.

#6 According to very extensive research detailed in a new book entitled “Academically Adrift: Limited Learning on College Campuses”, 45 percent of U.S. college students exhibit “no significant gains in learning” after two years in college.

#7 Today, college students spend approximately 50% less time studying than U.S. college students did just a few decades ago.

#8 35% of U.S. college students spend 5 hours or less studying per week.

#9 50% of U.S. college students have never taken a class where they had to write more than 20 pages.

#10 32% of U.S. college students have never taken a class where they had to read more than 40 pages in a week.

#11 U.S. college students spend 24% of their time sleeping, 51% of their time socializing and 7% of their time studying.

#12 Federal statistics reveal that only 36 percent of the full-time students who began college in 2001 received a bachelor’s degree within four years.

#13 Nearly half of all the graduate science students enrolled at colleges and universities in the United States are foreigners.

#14 According to the Economic Policy Institute, the unemployment rate for college graduates younger than 25 years old was 9.3 percent in 2010.

#15 One-third of all college graduates end up taking jobs that don’t even require college degrees.

#16 In the United States today, over 18,000 parking lot attendants have college degrees.

#17 In the United States today, 317,000 waiters and waitresses have college degrees.

#18 In the United States today, approximately 365,000 cashiers have college degrees.

#19 In the United States today, 24.5 percent of all retail salespersons have a college degree.

#20 Once they get out into the “real world”, 70% of college graduates wish that they had spent more time preparing for the “real world” while they were still in school.

#21 Approximately 14 percent of all students that graduate with student loan debt end up defaulting within 3 years of making their first student loan payment.

Statistics provided by Michael Snyder

There are millions of young college graduates running around out there that are wondering where all of the “good jobs” are. All of their lives they were promised that if they worked really hard and got good grades that the system would reward them.

Sometimes when you do everything right you still can’t get a job. But you can take action.
Consolidating your student loans is simply lumping them together with the hopes of getting a better interest rate on a loan that you can’t pay right now. So what’s better than consolidation? Settlement! Time to talk to Credit 911.
Credit 911 is able to lower your current payment and actually eliminate the remainder of the loan in years rather than decades! And that doesn’t include late fees and penalties if you can’t make timely payments on your loan! If you really need information on how to get out from under your Student Loans and finally be free, then you need to talk to Credit 911.

Wednesday, June 1, 2011

Your Mi$ery I$ Their Profit

Up to your ear$ in $tudent loan$? That'$ good new$ for the bond trader$

By Amy Guthrie

Next time you sit down to sign your monthly student loan check, consider this: Somebody out there is trading bonds made up of thousands of loans like yours, profiting off your inability to pay for college. And it's not just the guy that lives in a way nicer apartment across the street and dons spiffy suits on his way downtown every day. It's also high rollers like him in Chicago, London, and Tokyo.

Sound ugly? Well, that's the way the student loan business works. Private lenders like Sallie Mae, and even state agencies, are increasingly funding college loans through capital markets.

The bonds are an easy sell because most student loans are 98 percent guaranteed by the U.S. government. If Joe College decides to move to Sweden and never pay a dime on his debt, Uncle Sam picks up the tab. Plus interest.

What investor could refuse an offer like that? "You put it out there, and people eat it up," said one veteran banker.

Congress is presently considering whether the government should, if not end the party, at least turn down the music and raise the lights. It's been one big bacchanal so far. Last month, the Senate passed a bill that would limit the growth of loans qualifying for one generous federal subsidy, but left other substantial handouts in place.

This year alone, industry leader Sallie Mae has already issued $31 billion in bonds guaranteed by student loans. Since the banks that help sell these bonds, known as underwriters, get about 1 percent of the sale for their efforts, Sallie Mae's issuance should translate into at least $310 million in bank fees. And that's just Sallie Mae. Over a dozen other lenders, private and public, are also sharing the profits of your misery with bankers.

There are similar markets for credit card debt and home mortgages, but right now the growth is in student loans. Each year, 13 million people apply for federal student aid; the Department of Education expects to grant about half those petitions in loans this year, to the tune of $52 billion. The typical undergraduate leaves school owing $19,000, or double what the average 1997 graduate owed. In the bigger scheme of things, 70 percent of all federal student aid comes in the form of loans, while grants account for just 22 percent. Thirty years ago that ratio was reversed. Meanwhile, the U.S. is experiencing a population explosion among 18- to 24-year-olds that rivals that of the baby boom generation. All of these trends are playing right into the hands of the nation's big student lenders.

As recently as 2001, student loan providers sold just $11 billion in bonds. That figure rose above $27 billion in 2002 and hit $52 billion last year.

Each bond consists of thousands of student loans, known as a pool, that investors scrutinize to guess what percentage of borrowers will make regular payments, default, or pay ahead of schedule. In a best-case scenario for investors, everyone pays on time. The average trader rakes in $500,000 to $2 million a year, and never considers that he is wagering on individuals.

"I think about it in pools," said Greg, a 38-year-old Sallie Mae bond trader at a top-tier bank. Greg (not his real name) is a family man who wears Burberry suits and lives in Connecticut.

Freddy, a trader at another top bank, said it doesn't make a difference to him whether he's trading bonds backed by credit card debt or student loans. When asked whether he's ever thought the practice might be morally questionable, Freddy (also not his real name) got defensive. "Sallie Mae could not possibly keep all the loans they have on their books. They have to sell them; otherwise they wouldn't be able to make any more loans."

Graduating students facing huge debt find it a bit harder to be grateful for the role the bond market plays. "That's just wrong," said Margarita Testa, a 29-year-old confronting $35,000 in loans after receiving her bachelor's degree from Florida International University in May. Testa said she wouldn't mind that so many people are making a living off graduates like her if the practice were more transparent.

Longtime bond analyst Jimmy Lawson says students shouldn't be bitter. "When I was a student, I didn't know a stock from a bond. This is life. People invest," said Lawson (not his real name). Lawson, like many other Wall Street veterans who spoke with the Voice, declined to have his name used in this article for fear of losing his job. "Are people in this business highly paid? Certainly. But I'm a huge believer that this is nothing but a world of good," he said.

One of the benefits of turning loans into bonds is that cash in the lending pot is quickly replenished. In theory, the availability of cash should lower the cost of borrowing for the average joe. But since interest rates on student loans are fixed by the government, the savings aren't passed on to borrowers. Instead, the banks reap the benefits of playing with cheaper money.

As the student loan industry thrives, a debate is heating up in Washington about how big a cut of the student loan business middlemen should get and how much the program ends up costing taxpayers. Government-backed student loans were born under the Higher Education Act of 1965, which needs to be reauthorized every five years. The main proposal now floating to update the act—the Republicans' College Access & Opportunity Act—would lower government subsidies for lenders. A separate bipartisan bill, the Direct Loan Reward Act, suggests giving schools an incentive to use the government's Federal Direct Student Loan Program, which was created under the Clinton administration to compete with the Federal Family Education Loan Program, or FFELP, in which private lenders like Sallie Mae participate.

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Credit Bureau’s Have V.I.P.’s?

Credit Error? It Pays to Be on the V.I.P. List

by Tara Siegel Bernard

The credit rating bureaus, whose reports influence everything from credit cards to mortgages to job offers, have a two-tiered system for resolving errors — one for the rich, the well-connected, the well-known and the powerful, and the other for everyone else.

The three major agencies, Equifax, Experian and TransUnion, keep a V.I.P. list of sorts, according to consumer lawyers and legal documents, consisting of celebrities, politicians, judges and other influential people. Those on the list — and they may not even realize they are on it — get special help from workers in the United States in fixing mistakes on their credit reports. Any errors are usually corrected immediately, one lawyer said.

For everyone else, disputes are herded into a largely automated system. Their complaints are often electronically ferried to a subcontractor overseas, where a worker spends, on average, about two minutes figuring out the gist of the matter, boiling it down to a one-to-three-digit computer code that signifies the problem — “account not his/hers,” for example — and sending a dispute form to the creditor to investigate. Many times, consumer advocates say, the investigation translates to a perfunctory check of its records.

“The legal responsibility of the credit reporting agencies and of the creditors is well established,” said Leonard Bennett, a consumer lawyer in Newport News, Va. “There is a requirement that they do meaningful research and analysis, and it is almost never done.”

Consumers who have trouble fixing errors through the dispute process can quickly find themselves trapped in a Kafkaesque no man’s land, where the only escape is through the court system.

“You are guilty before you are proven innocent in a situation like this,” said Catherine Taylor, 45, of Benton, Ark., who said she had been denied employment and credit because her filing was mixed up with a felon who had the same name and birthday.

Judy Johnson of Bossier City, La., was confused with a less creditworthy Judith Johnson, with a similar address and Social Security number. For nearly seven years, Judy Johnson, a 63-year-old credit manager for a building supply company, said she tried to remove the black marks from her credit report. But when she was denied a credit card, she knew the problem had returned — a third time. “This time, I was livid,” she said.

She ultimately brought a suit against one of the bureaus, and recently settled for an amount she cannot disclose. But the problems still linger. A deputy sheriff recently came to her door to serve her papers for a debt she says she does not owe.

The credit rating bureaus, private-sector companies that each attempt to track all American consumers’ credit use, have grown much more powerful over the last couple of decades as credit has become a crucial cog in the nation’s financial system. Their reports are used to formulate the all-powerful credit score, which lenders use to determine creditworthiness.

But as the bureaus’ work has become more important, consumer advocates say, regulation has not kept up, in large part because their overseer, the Federal Trade Commission, lacks broad authority. That could change once responsibility for the credit bureaus shifts to the new Consumer Financial Protection Bureau, which will be able to write rules and examine the credit agencies’ policies.

The bureaus, meanwhile, do not have an economic incentive to improve the system, consumer advocates say, because their main customers are the creditors, not consumers.

“There is no neutrality in the credit reporting agencies,” said John Ulzheimer, who has been an expert witness in more than 80 credit-related cases and is president of consumer education at SmartCredit.com. “They work for the lenders who buy credit reports from them, and anyone who suggests otherwise is not being intellectually honest.”

When asked about the V.I.P. category, TransUnion said all consumers “have the ability to speak to a live representative.” Equifax said consumers who received a free copy of their credit report were provided with a number for customer service.

Experian denied that it had V.I.P. lists. But a spokeswoman did say that prominent people deemed high risk — like politicians in an election year — might have their credit files taken offline so that creditors or other companies making inquiries could not get access without the bureau’s permission. Experian said those people did not receive any other special handling.

David Szwak, a consumer lawyer in Shreveport, La., who has handled dozens of credit cases, said that the V.I.P. designation and preferential treatment did exist at Experian, and he provided sworn testimony from former Experian employees that the category existed.

Estimates of credit reports with serious errors vary widely, anywhere from 3 to 25 percent. A recent study, paid for by the Consumer Data Industry Association, the trade group for the bureaus, found potential errors in 19.2 percent of reports, but said that less than 1 percent of them had disputes that, when settled, resulted in a meaningful increase in scores. Even 1 percent translates into millions of consumers, since there are at least 200 million files at each of the bureaus.

The F.T.C. is expected to deliver a nationwide study on credit report accuracy next year that could provide more clarity. It could also include recommendations for legislative action.

The volume of disputes has been rising as consumers borrow more and gain greater access to credit reports. The automated system was a response to that. A spokesman for the trade group said most consumers received an answer within 14 days.

Experian is the only bureau that still processes disputes in the United States, experts said, though most complaints wind their way through the same online system — unless the dispute involves a V.I.P.

“They get a lot more high-end treatment,” said Mr. Szwak, the lawyer, who has read the bureaus’ internal procedure manuals and deposed or cross-examined employees. The biggest difference at TransUnion and Equifax, lawyers said, is that V.I.P.’s disputes are specially handled domestically. Regular consumers’ files, meanwhile, may get priority treatment if they involve a time-sensitive issue, like a mortgage pending, or if the consumer is represented by a lawyer or dealing with fraud.

Last year, new rules went into effect to strengthen existing regulations on the accuracy of reports. The rules also allow consumers to dispute errors directly with the creditor. But critics say the rule lacks any teeth because consumers don’t have the right to sue the companies. (Individuals can, however, sue the bureaus and creditors after lodging a dispute through their system.)

	But the problem, advocates say, is that consumers cannot vote with their feet. “They cannot remove their information from the bureaus,” said Chi Chi Wu, a staff lawyer at the National Consumer Law Center, who wrote a report on the automated dispute process in 2009, “or take their business elsewhere.”

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