Consumer Reports partnered with WorkMoney, a national nonprofit dedicated to lowering costs and raising incomes for Americans, to ask consumers to check their reports and tell us about their experiences through a short survey. Almost half of consumers who checked their credit reports found mistakes in them, with more than a quarter finding serious errors involving debts that could damage their credit scores and limit their financial opportunities. A significant number of the more than 4,000 Credit Checkup participants also reported having difficulty obtaining their free credit reports online.
Key Findings
Consumers had difficulty getting their reports. Among respondents who were able to access their credit reports, 11 percent reported that doing so was either “Somewhat hard” or “Extremely hard.”
Consumers are finding errors in their reports. The survey found that 44 percent of respondents who successfully checked their credit reports found at least one error; 34 percent of those who found an error reported an error relating to personal information, and 27 percent reported an error relating to debt information.
The system for disputing errors on a credit report is ineffective. Consumers who identified errors in their reports had trouble with the dispute system. Some consumers expressed frustration that disputes were not resolved in their favor despite supporting documentation, and others were confused by the process in general.
Marketplace Recommendations
We believe the following measures would improve the credit reporting system, better enabling it to work for consumers rather than marketing consumers as a product. Some of these recommendations can be adopted voluntarily by the consumer reporting agencies (CRAs), others can be achieved by state-level policymakers, and some may require action by Congress or a federal agency.
1. Consumers should have more control over their own credit information. A consumer should be able to access their credit reports for free at any time, without being marketed paid services. The website for consumers to access their credit reports, AnnualCreditReport.com, must be improved so it more reliably delivers credit reports online. The identity verification system should also be improved so consumers are not locked out of receiving their credit reports due to old or incorrect information being required to verify their identity.
2. Credit report accuracy requirements should be strengthened. Additional pieces of personal information should be used to match credit information with a consumer to ensure it is associated with the correct person. Additionally, it should be illegal to sell or attempt to collect a debt if the debt is too old to legally appear on a credit report. The reverse should also be true: If the legal validity of a debt is in question, the debt should not appear on a consumer’s credit report until the furnisher can prove the debt is valid.
3. The dispute resolution process should be improved. Consumers should have the right to appeal the results of a dispute. The CFPB should step up its enforcement efforts to ensure that credit reporting agencies and data furnishers conduct thorough investigations of consumer disputes.
4. Restrict the reporting of medical debt. Medical debt is less predictive of future repayments than traditional debt. People get deep into medical debt through no fault of their own and often as a result of inflated healthcare pricing structures. Prohibiting the reporting of medical debt will help consumers receive access to credit and allow them to build a more secure financial life.
5. Restrict the use of credit reports and credit scores for non-credit-related purposes. Credit scores should not be used for practices such as determining insurance rates or making employment decisions.