One in twenty Americans have errors on their credit report so significant that the errors result in less favorable loan terms or outright rejection. From 2002 to 2005, I was one in twenty. My experience with a particular business was such that they were not dealing with me fairly. I owed them nothing but they placed a negative tradeline on my credit report. Pressed for time, I gave them money that I did not owe in order to bring the tradeline to close. My credit report, however, never reflected the payoff. I found myself in need of a service that did not exist; a service that gave me the power to ensure that my credit report tradelines reflected my payments. And having no other recourse, I set about creating Alekto.
It all started when I was in the process of refinancing my house. Mortgage rates were in free fall and I stood to save a great deal of money by getting into a lower interest-rate loan. Once my mortgage broker and I had worked out a deal to my liking, he pulled my credit report so that we could begin to execute. That’s when things went left. I was expecting everything to go smoothly, as this was the second home that I had owned and I went through two separate finance events on my first home. But my broker called me back and told me something that I was not expecting. He informed me that he could still do the loan but that I’d have to buy down a half a point, based on my credit report. When I asked him what happened, he told me that there was a negative tradeline on my account for $180. The company reporting the tradeline was the daycare provider in my old neighborhood.
First off, I didn’t owe my former daycare provider any money. I gave them proper notice that I was leaving and made the final payment. But when I contacted them to inform them of their bookkeeping mistake, they told me that they had no record of my making the final payment. It had been over a year since I moved and I no longer had records of any payments to them. We were at an impasse. They were not budging and I needed my mortgage refinanced. So I paid them the $180 and got them to fax me a letter stating that the account was current. My mortgage broker used this letter to perform a rapid rescore against my credit report. This resulted in our ability to close the mortgage under the terms upon which we had originally agreed. I was very happy with this solution. Even though it cost me $180, the mortgage savings were orders of magnitude greater than this amount. All was well with the world, or so I thought.
Eighteen months later, after interest rates continued to fall, I decided to refinance my mortgage, again. I contacted the same broker that I had used before and we began the process. But, after he pulled my credit report, he saw the same negative tradeline that was there before. He was puzzled, stating that he remembered my having resolved that issue during the last refinance. He was correct. But, the tradeline was never updated. So I called the daycare provider and informed them of their mistake. I was told, once again, that they had no record of my having ever paid the $180. Unfortunately, for me, I had misplaced the letter that they had previously given me. So I ended up paying them another $180 in order to get another letter that enabled me to close on my new loan.
Fast-forward another year. When I refinanced a third time the $180 tradeline was still showing up on my credit report as not paid. Luckily, I saved the previous payment letter and did not have to pay a new ransom in order to close my loan. But I was very upset about what was happening. Clearly, a pattern was revealing itself. Though required by law to do so, the daycare provider was not updating the credit report tradeline that they filed on me. And though I could have disputed the tradeline, dispute resolution would take thirty (30) days. Each time this came up, I needed to close my mortgage now. There had to be a better way. And if there wasn’t, I was determined to make one.