Who to Believe When it Comes to Credit Report Mistakes?

You may recall earlier this year, CBS’ 60 Minutes reported on the massive number of errors in Americans’ credit reports. Some watched in disbelief as Steve Kroft reported on this very important, though often overlooked, financial reality. It seemed incredibly unlikely that so many errors would plague consumers’ reports, especially considering the technology available today.

Experian Reacts Within Hours

Within a few hours after the show aired, Experian, one of the three biggest credit reporting agencies, posted on its blog that Steve Kroft’s report was woefully misleading:

As you may have seen, 60 Minutes ran a story on the credit reporting industry tonight, and unfortunately, much of the story was inaccurate and misleading. The focus of the segment was on data accuracy and the results of the yet-to-be released FTC accuracy study.

Experian explained to readers that much of the story came from findings from a “yet to be released FTC study” and went on to explain that its own numbers have been validated by “independent third party studies”, though it didn’t name any of those third parties. Experian claimed the segment that included an interview with the FTC Commissioner was perhaps not worded properly. In fact, the agency explained, there were no distinctions made in what it refers to as “material errors” and consumer errors that affect the scores and that a full 98 percent of its consumer credit reports are accurate anyway.

From there, Experian began justifying its policies and cited a December 2012 study, conducted by Consumer Financial Protection Bureau, stating,

Consumer Financial Protection Bureau…looked at the issue of credit accuracy. Their analysis found that only between 1.3% and 3.9% of consumers disputed information in their credit report that they believed was in error….that number may overstate the number of actual inaccuracies, since the study did not indicate how many of the disputes were the result of an actual error, instead of mere requests to update information…

But CFPB also mentioned the FTC study, saying that the decade long study on credit report accuracy would be released in 2014. The CFPB report included no numbers – preliminary or otherwise – because none exist in that report (which can be seen here).

PERC Up

Next, Experian cited yet another study, this time, from the Policy and Economic Research Council. It too is included in the CFPB report. Experian’s blog insists this report discovered “only one-half of one percent found an error that would cause the consumer to pay a higher price.” But that’s not exactly right. The PERC report actually reads:

The PERC study found that in 45% of the consumer disputes, the consumers’ trade lines were modified, 41% of the disputed trade lines were deleted. The corrections in the relevant trade line information resulted in credit score increases of 25 points or more in 0.93% of credit reports examined or 10 points or more. In short, more than 3 million Americans would see increases in their credit scores due to having the errors removed.

Of course, there are calculation algorithms, and those must be kept in mind; however, it would seem as those some invisible line’s being drawn in the sand with at least one of the major credit reporting bureaus going on the defense. When government agencies and the financial sector clash, the one common denominator is the realization that consumers are the ones who lose.

Politics, of Course

In another area of the Experian blog post, it mentions Congress-ordered review where it directed the Federal Trade Commission to conduct a decade-long review of the dispute process. Experian reports there were no violations of law. Technically, that’s true. For a law to be broken, it would require the reporting agencies to fall out of compliance with federal policies. What Experian did not mention, however, was what the investigation uncovered. One in five consumers had an error on at least one of their three credit reports. It also did not mention Howard Shelanski’s comments on the findings. Shelanski is the Director of the FTC Bureau of Economics. His analysis, “These are eye-opening numbers for American consumers” are indicative of the greater problems from a different perspective.

Speaking of perspective, it’s important to note that in none of these research efforts were there accusations of illegal policies being instituted. Carelessness, perhaps – but not a deliberate effort of any of the bureaus to put American consumers at risk.

Acronyms and Agencies

The problem, as far as many consumers are concerned, is the lack of transparency and ulterior motives in how the reports are analyzed and reported. Further complicating matters for many is the realization of just how many different government agencies are attempting to provide direction. Between the CFPB, FTC, FDIC – along with several laws – including the 2010 CARD Act and the Fair Credit Reporting Act, attempting to discern the facts from limited information that appears to be spun to fit whatever the media is reporting is simply not good for American consumers.

The recession, mortgage crisis (and subsequent foreclosures and the associated scandals), corrupt Wall Street executives, the high unemployment rate, the new insurance laws – it’s little wonder so many feel as though it’s impossible to keep up. It appears both sides will be warring against the other in the coming months and years.

It still comes down to the same thing. Consumers must take a proactive approach when it comes to credit monitoring. The one common denominator among all of these agencies and media outlets is that requesting a copy of your annual credit report is the one sure way of knowing where things are in your credit history. Unfortunately, only 20 percent of us actually do that. If a consumer does spot errors, and provided he can’t seem to get the credit bureaus to budge, even though he’s provided documentation, the next call should be to the Consumer Financial Protection Bureau. One of the newer watchdog agencies, CFPB, maintains a database and is happy to take consumer complaints, investigate them and then follow up.

Have you ever noticed an error on your credit report? How quickly were you able to resolve it? let us know your thoughts.

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