(MintPress) – Though “95 percent of consumers are unaffected by errors in their credit report,” the findings of a Federal Trade Commission (FTC) study examining credit report accuracy found that five percent of U.S. consumers — about 40 million Americans — have an error on their credit report that “could lead them to pay more for products such […]
(MintPress) – Though “95 percent of consumers are unaffected by errors in their credit report,” the findings of a Federal Trade Commission (FTC) study examining credit report accuracy found that five percent of U.S. consumers — about 40 million Americans — have an error on their credit report that “could lead them to pay more for products such as auto loans and insurance.”
“It’s unconscionable that 40 million American have errors in their credit reports, and that 10 million have errors grave enough to cause them to be denied or charged more for credit or insurance or even be denied a job,” said Chi Chi Wu, staff attorney at the National Consumer Law Center.
The FTC is a federal agency, funded by taxpayers, tasked with protecting both consumers and monitoring corporations to ensure fair competition in our economy. In its study, which was ordered by Congress in 2003 to complete by the end of 2014, the agency followed 1,001 consumers as they tried to fix or dispute errors in their credit reports for eight years. Of those consumers who tried to make adjustments, one in 10 saw their credit score change.
“These are eye-opening numbers for American consumers,” said Howard Shelanski, director of the FTC’s Bureau of Economics. “The results of this first-of-its-kind study makes it clear that consumers should check their credit reports regularly. If they don’t, they are potentially putting their pocketbooks at risk.”
Not everyone agrees with the FTC’s findings — the Consumer Data Industry Association, the trade group for the nation’s credit reporting agencies, stressed the fact that 95 percent of credit reports are “highly accurate,” and lightly accused the FTC of inaccurately interpreting the study’s findings.
“It’s easy to selectively hype snippets from the FTC study to sensationalize the issue,” Stuart Pratt, consumer data industry spokesman said in a press release. “But the number important to consumers is the one they ignored – that only 2.2 percent of credit reports contain material errors.” The FTC is reporting 5 percent of consumers are impacted by serious credit report errors, but the industry says the number is closer to 2.2 percent as consumers have three different major credit reports, and often errors appear on only one or two of those.
Credit expert John Ulzheimer says both the FTC and the credit industry trade group “embellished” their claims about the results of the study, but said he ultimately agrees with the FTC’s interpretation, as he feels the results are more disturbing than they are confirming that credit files are accurate. Though Ulzheimer did add that errors claimed by consumers were not independently confirmed and should therefore be taken with “a grain of salt.”
But it’s not just the amount of errors consumers found on their credit reports that was troubling — it was also the amount of time it took to correct them. Credit bureaus are required by law to begin investigating reported mistakes within 30 days, but there is not a time limit with regard to how long an investigation can span.
Of the 262 consumers in the study who disputed information, only 37 percent reported that all of their concerns were addressed. Forty-two percent reported that their credit report had been modified but there were still errors, and 21 percent said they were completely unsuccessful in correcting their reports.
Protect Your Credit Score
Stewart Welch is a financial advisor in Alabama. He says to protect your credit, consumers should make reviewing your credit report part of your annual financial review. If you do find a mistake, Welch says consumers should talk to the source.
“Each credit reporting agency has a process to dispute an error. Send a letter to them outlining the dispute. Include copies of all your documentation. Request they fix it and remove the inaccurate item. It’s also a good idea to send them a copy of the actual credit report and circle the items you believe are inaccurate,” Welch said.