(ARA) - They wield tremendous power over your life - and the lives of every other bill-paying American adult. But what do you really know about the credit bureaus? Friend or foe? Fact or fiction?

Survey after survey suggests that the average American knows little about consumer reporting agencies other than that they essentially control consumer credit profiles - and as a result, their buying power. And that's how the credit bureaus want it, argues Dr. Randy Padawer, a clinical psychologist whose research into consumer credit has been featured in Smart Money Magazine and the bestselling FICO 850 seminar for The Motley Fool.

"The three major credit bureaus truly want consumers to believe that they've each been blessed with an officially sanctioned franchise," says Padawer, who has consulted for Lexington Law, a firm that helps consumers remove errors and negative information from their credit reports. "Actually, the only reason such corporations now dominate the landscape is because their progenitors simply managed to swallow up each other as they battled for preeminence through the decades. Greed, not official dictum, paved their way."

The fewer facts you know about the credit bureaus, the more difficult it will be to correct a problem when one shows up on your credit report. And the odds are that an error will appear; four out of every five credit reports contain errors, and one out of every four contains errors serious enough to cause significant problems for consumers, according to research by the National Association of State Public Interest Research Groups.

Here are some common credit bureau fictions and the real facts behind the fiction:

Fiction 1: There are only three "official" consumer reporting agencies.

Fact: Many companies are in the business of collecting, compiling and processing credit information. Most Americans, however, are familiar only with the three companies that have positioned themselves at the top of the industry: Experian, Equifax and Trans Union.

Fiction 2: The three major credit bureaus are officially sanctioned by the federal government.

Fact: "There are no official bureaus," Padawer says. "While most Americans perceive their credit reports to have at least the same legal standing as their driving records, the truth is that the government had no role in establishing the for-profit companies which produce them."

Fiction 3: The three major consumer reporting agencies all have the same information.

Fact: Different creditors often report to different credit bureaus. In fact, there is no law which requires them to report to any of the big three bureaus at all. Consumer reporting agencies do not share information either, so if you find an error on your report from all three agencies, correcting it with just one of them does not mean the error will automatically come off the other two reports.

Fiction 5: Consumer reporting agencies will act promptly to help me rectify an error or remove negative information from my credit report.

Fact: Federal law requires all credit bureaus to complete an investigation into a consumer complaint within 30 days of when it was first made. The bureau may decide the disputed item remains on the report as is, revise but not delete the information, delete the information, or deem the complaint frivolous. Given those four options, you have a 75 percent chance of getting an answer you won't like.

Increasingly, frustrated and fed up consumers are turning to professionals, like Lexington Law, to help them resolve credit report issues and remove negative information from their credit reports. Anyone who has ever disputed an item on a credit report knows the process can be long, aggravating and perhaps ultimately fruitless. Involving a professional can achieve faster, better results. While each case is different and individual results may vary, on average, Lexington Law clients have seen 10 deletions from their credit reports within the first 90 days of working with the firm.

To learn more about credit fact and fiction, and how to make the facts work in your favor, visit www.LexingtonLaw.com.

Copyright © 2006, ARA Content