Credit Report Errors Can Make Getting Credit Difficult and Can Be Hard to Fix
By Consumers Union on Wednesday, April 23rd, 2014
It can be a challenge for a consumer to maintain a good credit history. Unfortunately, sometimes lenders can make it even more difficult by reporting incorrect information to credit bureaus that can damage a consumer’s credit record.
Credit report mistakes can have a big impact on consumers. Our recent policy brief, Errors and Gotchas: How Credit Report Errors and Unreliable Credit Scores Hurt Consumers, shows how mistakes can hurt a consumer’s credit score, and even cause them to be turned down for credit or charged higher interest rates. Consumers may find themselves paying hundreds or even thousands more in interest over several years for a mortgage or credit card, or higher rates for auto or homeowners insurance because of errors on their credit reports.
Mike of Dunwoody, Georgia had some of his credit accounts involuntarily closed and had a hard time getting new credit because of a mistake on his credit report:
“A creditor claimed I was delinquent in my payments and I claimed I was not based on the conditions of my account. Creditor persisted and put a negative in my report causing other creditors to cancel my accounts, new creditors would not give me credit because of the negative. At the checkout counter of a store where I wanted to take advantage of an offer I was refused in front of other customers because of the negative in my report. I finally had to file suit against the creditor and the three reporting agencies to get all this corrected. It took over two years to get this resolved.”
Mike’s story also shows how difficult it can be to fix credit report errors with the creditor and credit bureau. In Mike’s case, the creditor did not believe that it was in error, and he ended up having to go to court in order to correct his record with the creditors as well as the three major credit bureaus – Experian, Equifax, and TransUnion.
When a consumer files a complaint about a credit report mistake with a credit bureau, the dispute is sent to the creditor – also known as “data furnisher” — to investigate. Oftentimes, however, the furnishers don’t do an extensive examination of whether an error has taken place. They usually just check the dispute against the information they have in the computer, without doing a proper investigation.
Many consumers have experienced credit reporting errors. An estimated 40 million Americans have an inaccuracy on at least one of their credit reports, according to a Federal Trade Commission report. That’s why we’re supporting the Stop Errors in Credit Use and Reporting (SECURE) Act, which was introduced in the Senate earlier this month. The legislation would make it easier for consumers to fix errors on their credit reports. For example, the bill requires credit bureaus to send, and creditors to review and conduct a meaningful investigation of all documents and evidence submitted by the consumer about a credit report error. On top of that, the SECURE Act gives consumers the right to a free credit score – one that’s used by most lenders – with their free annual credit reports. Sounds like a pretty good deal to us.
For more information about how to check your credit report for errors and to correct them, see our consumer tips. If you’re like Mike and have experienced a credit report error, we encourage you to share your story!