CU policy brief shines a light on credit report errors and unreliable credit scores

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By Maureen Mahoney on Wednesday, April 9th, 2014

Now more than ever, consumers need credit reports that are fair and accurate, and deserve easy access to the same credit scores lenders use to make decisions about them. That’s because credit report mistakes can make it harder to get a fair rate on a loan or auto insurance or even prevent someone from getting a job or apartment.

Consumers Union’s latest policy brief, “Errors and Gotchas: How Credit Report Errors and Unreliable Credit Scores Hurt Consumers,” urges policymakers to take steps to ensure the accuracy of credit reports and to give consumers the right to a free credit score with their free yearly credit reports.

The policy brief features stories from consumers about how hard it can be to correct credit report errors and the real damage they can cause to their lives. Other consumers told us how they have purchased scores from credit bureaus or obtained them for free online, only to be turned down for credit when their lender used a different score that put their credit in a less favorable light.

Fortunately, some members of Congress are responding. Today, Senators Brian Schatz (D-HI) and Sherrod Brown (D-OH) introduced the Stop Errors in Credit Use and Reporting Act of 2014. If passed, the bill will require credit bureaus to follow tighter rules to ensure credit reports are accurate and will guarantee consumers free yearly credit scores. These measures would help the estimated one in five Americans that have credit report errors.

Some financial companies have begun to respond as well. Last year, credit-scoring company FICO introduced the “Open Access” program, in which credit-card customers of participating banks – including First National Bank of Omaha, Barclaycard U.S., Discover, and Merrick Bank – can regularly access the same scores that were purchased by the banks in handling their accounts. In February, the Consumer Financial Protection Bureau (CFPB) sent letters to major banks, urging them to offer similar or even more expansive credit score disclosures.

But consumers shouldn’t have to rely on these voluntary programs. All consumers should be guaranteed free access to the scores that lenders view when deciding whether to extend credit and in setting interest rates. Consumers should be able to feel confident that the information contained in their credit reports is correct, and that any errors will be quickly and easily fixed.

If you’ve experienced credit reporting errors or have been sold a score that your lender didn’t use, don’t hesitate to share your story!

– Maureen Mahoney

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