Steve Croft of "60 Minutes" said last night one in five American consumers have an error in their credit report that could harm their ability to get a loan. Not only that but efforts by consumers to have these errors corrected by the credit rating agencies have been met with stonewalling.
One person commenting on the story said that “bad consumer data is this century's version of slavery's shackles.”
Ohio Attorney General Mike Dewine has opened an investigation into the credit reporting industry. He believes the fault of so many mistakes lies more with the industry than with the creditors who provide information, and he believes the industry is breaking the law by violating the 2003 Fair Credit Reporting Act by not responding to evidence of mistakes.
Credit reporting is a $4 billion industry dominated by three companies: Equifax, TransUnion and Experian.
CBS News contributor and analyst Mellody Hobson joined "CBS This Morning," to shed some light on the government study that revealed the extent of the problem.
Commenting on the stories of people who have been mistakenly banned from borrowing or allowed to do so only at increased interest rates due to mistakes that make them appear riskier, she said, "These are horror stories."
She went on to explain that the federal government passed the 2003 law to allow consumers to access credit reports from all three agencies for free, with the hope that the law "would diminish errors and protect you from identity theft because you're looking." However, "since then, the mistakes have not really diminished ... some are saying part of the reason they haven't dealt with it is that there are disputes within the agencies about how rampant the mistakes are."
Addressing the "60 Minutes'" report that banks may receive a different credit report than the individual," Hobson said, "This is a big deal. If that is true ... that is absolutely illegal and absolutely different than what Congress mandated."
While investigations into the industry are ongoing, Hobson said, there are steps consumers can take to protect their credit score now.
"First and foremost," she said, "get your report." The advice may sound basic, but there are 600 million reports across the three agencies in the U.S., and "between 2004 and 2010, only 25 million of those reports were accessed each year."
She suggests consumers "go to AnnualCreditReport.com ... the only place you can get it for free" and to "make sure that you stagger the reports when you get them. So there are three agencies, one every four months."
And as consumers and legislators look to place blame -- credit agencies typically blame banks and merchants -- Hobson said, "When you read the details of the federal Fair Credit Reporting Act you see the language is very different ... for the credit rating agencies. They have a duty to investigate, but the creditors have an obligation to report correct information and follow specific steps to correct information, including contacting you within 30 days after you've said that something is wrong on your credit report."
"Right now ... it's a little gray," she added, "but the creditor themselves seem to have a higher level of responsibility."
One commenter suggested taking creditors to small claims court if they don't correct mistaken information as requested.
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