By Emma Nitzsche
An investigation from Consumer Reports found that more than one-third of Americans have at least one error on their credit report. The finding was concerning, considering a poor credit score could result in lenders turning down consumers for credit cards, denying car and home loans, or charging higher interest rates.
In the survey, Consumer Reports asked volunteers to check their credit reports for errors. Of the 6,000 participants, 29% found personal information errors, and 11% found account information errors. The errors included unrecognized debt previously reported to a collections industry, on-time payments falsely claimed as late, or payments made but recorded as missed. Additionally, some of the participants said the false information made it difficult to access their credit report information online or through the telephone.
Consumer Reports policy analyst Syed Ejaz said mistakes about personal information could make it difficult to access credit accounts, but account information mistakes damage the actual credit score. Ejaz said these mistakes are usually discovered at the worst times.
“Unfortunately, sometimes folks find out way too late, like when they are in the middle of getting a loan for a new house or car. That’s why it is really important to make sure you check your credit report and assess it for accuracy,” said Ejaz.
In response to the survey, the Consumer Data Industry Association issued a statement where they called the findings “completely false and misleading.” Contrary to the report, the CDIA argued a 98% credit score accuracy rate.
But credit score errors are a problem that has the potential to cause significant setbacks. Individuals who believe their credit information is incorrect can write a letter directly to the reporting firm. The letter must include appropriate identification, like a driver’s license and proof of address, such as a bank or utility statement. The letter must clearly explain what is incorrect and provide the account number in the written statement. The Federal Trade Commission offers a sample letter for consumers on its website.
If the dispute is dismissed, a consumer can file again. However, Consumer Reports notes that it is critical to add additional information as a simple resubmission could automatically get the dispute denied. If all else fails, an individual could file a complaint with the Consumer Financial Protection bureau’s website. In some cases, an attorney specializing in consumer advocacy is necessary to make changes to credit scores. A list of qualified attorneys is available on the National Association of Consumer Advocates Website.
The National Association of Consumer Advocates’ executive director, Ira Rheingold, warned that it is extremely difficult to fix an error on a credit report. He explained that “there’s nothing about our credit reporting system that makes it easy for consumers, friendly to consumers, or helpful to consumers.”
