The Federal Trade (FTC) commission released the results of a study yesterday, Feb. 11, that revealed credit reports issued by the three major credit reporting agencies contained errors that could affect the cost of borrowing for American consumers. Overall, 20 percent of study participants identified errors; five percent had significant errors that could lower their credit score, causing them to pay more for loans. The most common errors were data inaccuracies with consumer credit accounts, referred to as tradelines in the industry, and with collection accounts.
The study worked with 1,001 participants to identify credit report errors and file disputes when inaccuracies were found. Of those who filed disputes, 80 percent experienced some modification to their credit reports, with approximately 5 percent experiencing a change of more than 25 points in their credit score.
The FTC urges consumers to monitor their credit reports. The three national credit bureaus – Equifax, TransUnion, and Experian — are required under the Fair Credit Reporting Act to provide consumers with one free credit report a year. Requests for credit reports may be made online at AnnualCReditReport.com. The free report will not include a consumer’s credit score, although consumers seeking this information may obtain it for a fee.
To dispute information on a credit report, consumers must contact the credit reporting agency in writing. Clearly identify each item in dispute and provide copies of any documents to support a claim. The FTC recommends consumers send correspondences by certified mail with return receipt so that consumer has a record of when their dispute was received. The credit bureau must investigate within 30 days.