Consumer Reports urges credit bureaus to make credit reports always free for consumers to help ensure they are fair and accurate
WASHINGTON, D.C. – Consumer complaints about credit reports submitted to the Consumer Financial Protection Bureau (CFPB) have risen dramatically in recent years, more than doubling between 2018 and 2021 and are on track to set a new record this year. During the first six months of 2022, credit report complaints accounted for nearly three-quarters of all complaints collected by the CFPB. Inaccurate information has been the top credit report-related complaint in recent years according to the agency’s complaint database.
In a letter sent today to Equifax, Experian, and TransUnion, Consumer Reports called on the bureaus to ensure credit reports are accurate, including making credit reports permanently free for consumers so they can keep an eye out for mistakes. CR has launched a petition to the three major credit bureaus urging them to make credit reports always free for consumers.
During the pandemic, the credit bureaus voluntarily agreed to provide consumers with free weekly access to credit reports through the end of this year. Under current law, consumers are entitled to one free credit report from each major bureau each year through annualcreditreport.com, but will have to pay the credit bureaus for more frequent access beginning in 2023.
“Credit reports play a critical role in all of our lives because they are the key to qualifying for affordable credit and other opportunities that help us build financial security,” said Syed Ejaz, policy analyst for Consumer Reports. “Mistakes on credit reports are all too common and can have serious consequences, especially for those who are already struggling to make ends meet. Consumers should be able to check their credit reports at no charge whenever they want to ensure they are fair and accurate. No one should have to pay to access their own financial information.”
Credit report errors can hurt your credit score and prevent you from getting a loan or credit card or trigger a higher interest rate to borrow money. Damaged credit scores can also affect whether you are hired for a job or can rent an apartment. Cell phone companies and cable operators review credit scores and may require a larger deposit to sign up for service if your score isn’t high enough. Credit scores are also used by insurance companies to determine how much you’ll pay for auto or homeowners coverage.
Credit report errors can include accounts or loans that have been paid off but appear unpaid, individual loans listed multiple times, and debts that are incorrectly reported in collections. Misspelled names, wrong addresses or incorrect birth dates on a credit report can also cause problems for consumers. Other mistakes can be particularly serious like “mixed files” – when information from someone else with a similar name or Social Security number appears in the wrong report or when fraudulent accounts are listed in a report as a result of identity theft.
Estimates vary on how commonly errors appear in credit reports. More than a third of nearly 6,000 volunteers who participated in Consumer Reports’ Credit Checkup project in 2021 found mistakes when they reviewed their credit reports. A nationally representative survey conducted by CR in January 2021 of 2,223 adults found that 12 percent of people who had ever checked their credit reports said they found errors. In 2012, the FTC found that 20 percent of consumers had at least one verified error on their credit reports, and that five percent had errors that could make them pay more for products such as a car loan or insurance.
CR’s letter to the credit bureaus details additional steps the credit bureaus should take to improve credit report accuracy, including strengthened measures to ensure the information in reports is matched to the correct consumer, more thorough error dispute investigations, and enhanced document retention.
Given the importance of credit reports, Consumer Reports is advising consumers to check them regularly to make sure they don’t contain any errors. If you find mistakes on your credit reports, CR recommends taking the following steps:
- Prepare dispute materials for each bureau: The three major credit bureaus – Experian, Equifax, and TransUnion – don’t communicate with one another, so it’s smart to contact each one. Filing a dispute with each credit bureau, instead of the lender or bank, offers protections governing how quickly it must be handled. It also provides a legal pathway to sue the credit bureaus and creditors or collectors, if necessary.
- Gather evidence: If you are filing a dispute about debt that’s reported incorrectly, include account statements or payment records. Credit bureaus can dismiss claims without enough backup information as “frivolous.” And resubmitted claims can be denied if they’re considered similar to previous ones.
- Create a paper trail: Write a letter explaining the problem. Avoid using standardized online forms provided by the credit bureaus, which might oversimplify your dispute by requiring you to choose among predetermined check boxes. Plus, by submitting your dispute online, you could unwittingly waive your right to sue as an individual or in a class action.
- Send all materials by certified mail: Keep copies for yourself. This makes it easier to confirm that the credit bureaus follow the lawful timelines. Credit bureaus have five days to get the disputed information to the financial institution or debt collector that supplied the information. If that company doesn’t investigate and respond to the dispute in time, the credit bureaus are legally required to delete the information.
- If you lose your dispute, consider working with an experienced attorney: You can sue a credit bureau or financial institution over credit report errors. Find an attorney through the National Association of Consumer Advocates at consumeradvocates.org
Michael McCauley, michael.mccauley@consumer.org, 415-902-9537