Washington, DC – Americans are dependent on the accuracy of the information in their credit reports to access many needed financial services, but a new Federal Trade Commission study of the US credit reporting industry found that one in four consumers had errors on their credit reports that might affect their credit scores, resulting in them having to pay higher rates for products such as loans and insurance.
The congressionally mandated study on credit report accuracy, released earlier this month, produced “eye-opening numbers for American consumers,” said Howard Shelanski, Director of the FTC’s Bureau of Economics. “The results of this first-of-its-kind study make it clear that consumers should check their credit reports regularly,” advised Shelanski, adding, “If they don’t, they are potentially putting their pocketbooks at risk.”
According to the study, in which participants were encouraged to use the Fair Credit Reporting Act (FCRA) process to resolve potential credit report errors, consumers do have recourse when they discover inaccurate information. Upon reporting an error, one in five consumers had that error corrected by a credit reporting agency (CRA) on at least one of their three credit reports and four out of five consumers saw some modification to their credit report after filing a dispute.
The discovery of an error and the filing of a dispute can also result in a credit score being altered. Slightly more than one in 10 consumers saw a change in their credit score after the reporting agencies modified errors on their credit report. Approximately one in 20 consumers had a maximum score change of more than 25 points and one in 250 had an increase of more than 100 points.
Cautioning consumers, Charles Harwood, Acting Director of the FTC’s Bureau of Consumer Protection, said, “Your credit report has information about your finances and your bill-paying history, so it’s important to make sure it’s accurate.”