The Federal Trade Commission recently released a study on accuracy and consumer credit reports. The results are unsettling: As many as 40 million Americans may have mistakes on their credit reports; 20 million of those errors may be significant.
The big three credit reporting agencies—TransUnion, Experian and Equifax—collect consumer data from credit cards, banks and loan agencies we do business with, then profit by selling that information to new banks, merchants, insurance companies and even our employers. Consumer credit worthiness often is reduced to a number—your credit score—which can have dramatic effect on insurance and loan rates.
“This study highlights once again the need for consumers to be vigilant when it comes to checking their credit reports and adopting a culture of monitoring,” said Adam Levin, chairman and founder of CyberScout. “Consumers need to discover negative information, whether it is due to error or identity theft, as quickly as possible.”
This eight-year, landmark FTC study reviewed the main three reports of 1,001 Americans and found:
- One in four consumers identified errors on their credit reports that might affect their credit scores;
- One in five consumers had an error that was corrected by a credit reporting agency after it was disputed;
- Four out of five consumers who filed disputes experienced some modification to their credit report;
- Slightly more than one in 10 consumers saw a change in their credit score after the correction;
- Approximately one in 20 consumers had a significant score change, which could dramatically affect bank, loan and insurance rates.
Of the 1,001 participants, 2,968 consumer credit reports were reviewed with a researcher, who also assisted with the dispute process.
But as CBS News found out, correcting your own credit report can range from a hassle to an outright nightmare. “Those mistakes can be nearly impossible to get removed from your record,” “60 Minutes” correspondent Steve Kroft recently reported. Trying to fix errors on his personal credit report in a recent segment, Kroft was transferred to a call center in India, only to be referred back to the website again—a seemingly endless bureaucratic loop.
“The whole dispute process takes an emotional toll,” Kroft reported. “After awhile, I think, people start to question their own sanity. … It's not in the power of the average person to fix these mistakes. It takes an incredible amount of effort, and even then sometimes it doesn’t work.”
The most important thing you can do to fix your credit report? Read it. Americans are entitled to check their credit reports for free, once a year, through the government-run annualcreditreport.com. It's important, as CBS points out, to use that link rather than the dozens of other sites that claim to offer free credit reports. Freecreditreport.com, for example, is a for-profit moneymaking arm of Experian. It only provides limited information for free.
If you are a victim of an error-ridden credit report, review your options. Your insurer, bank, credit union or membership organization may provide credit monitoring and support services from CyberScout at no additional cost. Don’t go it alone. Reach out for help. That's what we’re here for.