Mistakes Do Happen: Consumer Credit Reports

You'd think the information contained in our consumer credit reports, which are bought and sold daily to nearly anyone who requests and pays for them, would have to always be correct. In actuality, it doesn't work that way.

Credit bureaus collect and compile billions of snippets of information every year about consumer creditworthiness from banks and creditors and public record sources such as lawsuits, tax liens and legal judgments. The three major credit bureaus -- Experian, Equifax, and Trans Union -- maintain files on nearly 90 percent of all American adults. While numbers don't lie, people often make mistakes. Whether it's keying errors or communication snags, sometimes information gets corrupted.

Those consumer credit reports are routinely sold to credit grantors, landlords, employers, insurance companies, and others interested in the credit record of a consumer, and often (legally) without the consumer's knowledge or permission. Usually consumers rarely check their credit record until after they've been denied credit or otherwise encountered a problem. Credit report errors have been a serious problem that several states and Congress have addressed.

Consumer Credit Report Accuracy Survey Findings:

Twenty-nine percent (29%) of the credit reports contained serious errors - false delinquencies or accounts that did not belong to the consumer - that could result in the denial of credit

Forty-one percent (41%) of the credit reports contained personal demographic identifying information that was misspelled, long-outdated, belonged to a stranger, or was otherwise incorrect

Twenty percent (20%) of the credit reports were missing major credit, loan, mortgage, or other consumer accounts that demonstrate the creditworthiness of the consumer

Twenty-six percent (26%) of the credit reports contained credit accounts that had been closed by the consumer but incorrectly remained listed as open

Altogether, 70% of the credit reports contained either serious errors or other mistakes of some kind.

Access to Credit Report Findings:

Of the consumers that did obtain their credit reports, at least 14% of them were forced to call back 3 or more times after receiving busy signals or had to write a letter in order to receive their report

And 12% of the consumers waited two weeks or longer to receive their report once they finished requesting it. It took more than a month for one California man to receive his report

Overall, 15% of consumers who attempted to participate in the survey either made at least 3 phone calls and never got through or requested their reports but never received them

Check Your Report Carefully
Although credit reports contain vitally important information about most consumers, the accuracy of those reports is far from guaranteed. While credit bureaus and creditors have gone to great lengths to ensure that they have the right to collect and compile monstrous lists of information about most of us, mistakes in credit reports do happen, and more often than credit bureaus and, also, banks and department stores (who are often responsible for the mistakes) would like us to think. That's why it's a good idea to keep an eye on your consumer credit report. To be safe, check it once a year.

Until policymakers and credit bureaus do what it takes to set tougher standards to prevent and clean-up mistakes, too many credit reports will remain a ticking time bomb of dangerously inaccurate information. And our good names will continue to be at risk, as we pay the price for mistakes made by credit bureaus and other data dealers.