CR calls on credit bureaus to ensure credit reports are accurate and to give consumers free access to credit reports and scores at any time
WASHINGTON, D.C. – A new Consumer Reports investigation found that more than one-third of consumers who recently volunteered to check their credit reports found mistakes in them. Many of the nearly 6,000 consumers who participated in CR’s Credit Checkup project also reported having difficulty obtaining their free credit reports online, while others said they were unfairly charged for services.
In response, Consumer Reports sent letters to Equifax, Experian, and TransUnion today calling on them to ensure credit reports are accurate and to make it easier for consumers to obtain credit reports and scores securely at any time for free. CR has launched a petition to the three major credit bureaus urging them to take these steps.
“Mistakes in credit reports are more than just a frustrating hassle for consumers,” said Syed Ejaz, policy analyst for Consumer Reports. “Credit report errors can lower your credit score and lead to higher interest rates on loans or even prevent you from getting a job or an apartment. It’s time to hold the credit bureaus accountable for making sure credit reports are fair and accurate and to give consumers free access to their reports and scores at all times. No one should ever have to pay to access their own credit information.”
Complaints about credit reporting errors have remained among the most frequent submissions to the Consumer Financial Protection Bureau and have more than doubled since 2019. Mistakes in credit reports can damage a consumer’s credit score, make it more difficult to verify their identity with the credit bureaus, and limit access to affordable credit, employment, housing opportunities, and auto and homeowners insurance.
Credit report errors can include accounts or loans that have been paid off but appear unpaid, individual loans listed multiple times, or debts that are incorrectly reported in collections. Misspelled names, wrong addresses or incorrect birth dates in 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.
Consumer Reports initiated the Credit Checkup project earlier this year and asked volunteers to check their credit reports for accuracy and report what they found by filling out a short survey. Almost 6,000 volunteers signed up to participate in the project and filled out the survey between February 1 and April 1, 2021. CR’s analysis of the Credit Checkup survey responses found that:
- 34 percent of consumers reported finding at least one mistake in their credit reports.
- 29 percent of consumers found personal information errors in their credit reports such as a wrong name or address, with over half of those errors being incorrect addresses.
- 11 percent of consumers found account information errors, with the most common being accounts appearing in their credit reports that they did not recognize.
- 15 percent of consumers who reported having accounts in forbearance found that one or more of these accounts were not being reported as “current” as required under the CARES Act.
- 10 percent of consumers found accessing their credit reports “difficult” or “very difficult.” Many reported being locked out of their credit reports because of identity verification questions that they could not answer.
- Some consumers reported being charged by credit bureaus to access their credit reports and being unwittingly signed up for paid services.
Credit report mistakes are often caused by how consumer data is managed by lenders, banks, debt collectors, and other data furnishers and can be caused by software errors, poor data management procedures, and failure to comply with the standards laid out in the Fair Credit Reporting Act (FCRA). Mistakes made at the furnisher level affect the data held by the credit bureaus and any subsequent decisions based on the credit reports they hold.
Consumers who find errors in their credit reports must file a dispute with the credit bureaus but can have a difficult time getting mistakes corrected. Consumer complaints about the credit bureaus’ investigations of disputes remain high. In 2020, 24 percent of all closed consumer complaints submitted to the CFPB about credit reports focused on a problem with a dispute investigation. One persistent complaint is that data furnishers do not always address the supporting documents consumers submit with their disputes.
Consumer Reports recommends a number of tips for consumers who find mistakes in their credit reports. CR is calling on the credit bureaus and policymakers to adopt some much needed reforms to address the issues uncovered by the Credit Checkup project:
Strengthen and enforce accuracy requirements for credit reports. Credit reporting agencies, data furnishers, and debt collectors must be required to abide by stronger standards to ensure that the information contained in credit reports is accurate and that all consumer disputes are properly investigated. The Consumer Financial Protection Bureau and the Federal Trade Commission should use their full authority to penalize companies for any violation of the Fair Credit Reporting Act.
Provide consumers control over their own credit information. Consumers should have control over their credit information. Access to reports and scores should be free at any time; credit reports should be “frozen” by default, meaning that an individual’s credit information cannot be used to open new accounts without the consumer first unfreezing their credit; and consumers should be able to directly compare their reports, freeze and unfreeze their credit, and easily file disputes.
Redesign the identity verification system used by Equifax, Experian, and Transunion so that consumers are not locked out of their reports due to bad or very old information being used to verify identities. Consumers should not be blindsided by questions they cannot answer when trying to access their credit reports.
Rein in the role of credit reports in consumers’ lives. Credit reports should not be used in decisions regarding anything other than a consumer’s creditworthiness. They should not be used for any other decisions about a consumer, such as insurance pricing. Credit reports should not be used in decisions regarding anything other than a consumer’s creditworthiness.
Michael McCauley: email@example.com or 415-902-9537