A study done by the Federal Trade Commission (FTC) revealed errors in twenty percent of consumer credit reports.
A press release posted Feb 11. on ftc.gov showed that at least one out of every five consumer reports contained one or more errors. The three major reporting agencies for consumer credit reports are Experian, TransUnion and Equifax.
The study also showed that a smaller percentage of those errors, or approximately five percent, could lead to potential rate increases in products such as vehicle insurance quotes and loan interest rates.
Nevertheless, an error rate of twenty percent is quite alarming.
“These are 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. If they don’t, they are potentially putting their pocketbooks at risk.”
The report by the FTC included a look at all major groups that participate in the credit reporting and rating process – consumers, lenders and creditors, debt collection agencies and court systems. All work in conjunction with the three major reporting bureaus and the Fair Isaac Corporation, the agency that develops FICO credit scores.
Over 1,000 participants reviewed close to 3,000 individual reports.
Other figures reported by the study include:
- One in four consumers identified errors that could negatively impact their credit scores.
- One in five consumers discovered an error that had been corrected by one of the credit reporting agencies.
- Four out of five consumers who reported errors saw a change in their report, with the actual credit score being changed only ten percent of the time.
“Your credit report has information about your finances and your bill-paying history, so it’s important to make sure it’s accurate,” said Charles Harwood, Acting Director of the FTC’s Bureau of Consumer Protection. “The good news for consumers is that credit reports are free through annualcreditreport.com, and if you find an error, you can work with the credit reporting company to fix it.”
The FTC reminds consumers that an annual free credit report is available at AnnualCreditReport.com.
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