Credit Damage
Reporting Bureau Errors

A national study revealed 89 percent of us have incorrect and damaging credit reports that prevent gaining employement, force us to pay higher auto and health insurance rates, and higher interest rates on home and auto loans.

Worse, the study reveiled what consumers have been crying about for decades: the credit reporting bureaus are sharks and it takes years to get them to undo damaging and false information.

4 out of 5 Credit Reports Have Errors

CBS NEWS
NEW YORK, Oct. 13, 2004

Several studies over the past 15 years have documented mistakes in credit reports. This newest study, however, conducted by the National Association of State Public Interest Research Groups, is the most alarming. It discovered that 79 percent of all credit reports contain some type of error -- and 25 percent contain such serious errors that those individuals could be denied credit.

As consumers, we are often reminded that we should get copies of our credit reports.

Sending for your report, however, is kind of like flossing -- you know it is good for you, but it is easy to procrastinate.

A new study should shock everybody into sending for those reports immediately. The study found that 80 percent of credit reports contain mistakes.

Banks, insurance companies and even employers are using to credit reports to determine what kind of rates you should pay and if you should be hired for a job.

Ray Martin offers this advice on what mistakes were most commonly found, gives more details on the use of reports by employers, and tells consumers who find mistakes on reports what to do.

Here are other significant findings about credit report errors:

• 54 percent contained inaccurate personal information such as misspelled names, wrong Social Security numbers, inaccurate birth dates, inaccurate information about a spouse and out of date address. For example, one credit report listed a man's business partner as his spouse.

• 30 percent listed "closed" accounts as "open." For example, listing a student loan that was paid off years ago as still outstanding. Another report listed several credit cards, a mortgage and an auto loan all as open.

• 22 percent of reports had the same mortgage or loan listed twice. This mistake often occurs when loans are serviced or sold.

• 8 percent of reports simply didn't list major credit, loan, mortgage or other accounts that could be used to demonstrate the creditworthiness of a consumer.

These errors can create the appearance of a consumer having "too much" credit available, being over-extended, or not having been a responsible payer of his or her obligations.

The "big three" credit report bureaus - Equifax, Experian and TransUnion - have been in this business for years, so how can they possibly be making all of these mistakes?

Most mistakes can be pinned to your creditors and others providing info to the credit bureaus. As mentioned above, some mistakes happen when credit accounts change hands. Some errors are intentional. The report found that some banks admit to not furnishing bureaus with complete information on customers.

Other mistakes are simply human error. According to a credit bureau industry spokesman, some 30,000 data processors file 4.5 billion updates to credit reports each month, leaving considerable room for errors.

These errors on credit reports can cause consumers serious trouble. Many consumers probably don't realize just how serious.

It's no secret that banks use your credit report to determine interest rates on loans. The better your report, the better rate you receive.

More insurance companies examine credit reports to determine what rates you should pay on auto and homeowners insurance. According to the Insurance Information Institute, companies have found that people with poor credit reports tend to file more claims. Thus, it makes sense to charge these folks more for insurance, the companies say. This view is being challenged in some states.

Perhaps the most surprising use of credit reports is by potential employers. In recent months, newspapers have published stories about people not getting jobs after employers examined their credit reports.

About 35 percent of companies report using credit reports in pre-employment screening. This number is larger - about 40 percent - among retailers. According to credit bureaus, the other industries that appear the most interested in credit histories include defense chemical, pharmaceutical and financial services.

Why are more companies doing this?

"Past employers, for fear of lawsuits, are more reluctant to provide substantive past employment information about an applicant at another employer," Martin said.

Add to this the fact that reports are now relatively cheap and easy to obtain, and you can see why more companies are going this route. Federal law, however, states that a potential employer must obtain your permission before pulling your credit history.

Consumers should obtain a copy of their credit report from each credit bureau every year. For a copy of your credit report from the major credit bureaus, contact:

Equifax - www.equifax.com - 1-800-685-1111
Experian - www.experian.com -1-888-EXPERIAN (397-3742)
TransUnion - www.transunion.com -1-800-888-4213

Expect to pay about $9 apiece for your reports.

Here's some good news: a new federal law requires credit bureaus to provide consumers with a free copy of their report on an annual basis. You will still have to contact the bureaus yourself.

The law even establishes one central phone number you can call to request all three reports. This law is being rolled out across the country over the course of a few months. It takes effect on the West Coast in December, and will eventually reach the East Coast by September 2005.

If you find an error on your report, write a letter or e-mail to the credit bureau. The bureau is obligated to contact the creditor who supplied them with the disputed information and then respond to you within 30 days.

If you are unhappy with how the claim is settled you can ask to have a brief written explanation added to the bottom of your credit report.

©MMIV, CBS Broadcasting Inc. All Rights Reserved.

06/18/2004
Credit Reporting Errors 'Wreak Havoc' for 1 in 4

One-quarter of all credit reports contain errors serious enough to result in people being denied credit, access to favorable loan rates, and—in some cases—jobs, according to a report issued Thursday by a consumer group.
The group, the U.S. Public Interest Research Group (PIRG), criticized "the big credit bureaus and big business" for tolerating "big mistakes in credit reports."

" Those mistakes ruin the financial reputations of hardworking Americans," said Ed Mierzwinski, PIRG's consumer program director.

In an online poll conducted early this year, HR.BLR.com asked human resource professionals, "How damaging is a bad credit report for applicants at your company?" Of the 317 site visitors who voted, 62 percent said it's a non-issue, since they don't even conduct credit checks. Sixteen percent said, "It's damaging only if the report is a true jaw-dropper."

Another 12 percent said, "It’s not fatal, but it puts the applicant at a serious disadvantage," while 5 pecent said, "It usually spells doom." The remaining 4 percent said, "There's no damage, really. (We're just going through the motions.)"

While most employers appear to ignore them, credit reports nevertheless equate to what PIRG describes as "a consumer's financial résumé." The three national credit bureaus—Equifax, Experian, and Trans Union—hold files on virtually every adult American. Into the files go information about the consumer's creditworthiness from banks, creditors, and public records, including lawsuits, tax liens and bankruptcy filings.

As it did in previous reports over the past decade, PIRG took the "Big Three" to task Thursday for "sloppy" practices.

" It is outrageous that inaccurate credit reports could damage 1 in 4 consumer's ability to buy a home, rent an apartment, obtain credit, open a bank account, or even get a job," Mierzwinski said.

CNN/Money reported that a spokesperson for a credit industry trade group disputed PIRG's claims. The spokesman, Norm Magnuson, vice president of public affairs for the Consumer Data Industry Association, said credit decisions are based on a consumer's overall credit report. One negative claim may not have significant impact on the total score, he said.

He also noted that under federal laws credit reporting errors must be corrected within 30 days.

" I don't think there ought to be an error in any credit, but we update credit files 4.5 billion times a month," Magnuson said. "When there is an error, it is our obligation to correct it, which in 80 percent of the cases is done in 10 working days."

PIRG said it collected 200 surveys from adults in 30 states who reviewed their credit reports for accuracy. Among the findings:

* Twenty-five percent (25%) of the credit reports contained errors serious enough to result in the denial of credit;
* Seventy-nine percent (79%) of the credit reports contained mistakes of some kind;

* Fifty-four percent (54%) of the credit reports contained personal demographic identifying information that was misspelled, long-outdated, belonged to a stranger, or was otherwise incorrect;

* Thirty percent (30%) of the credit reports contained credit accounts that had been closed by the consumer but incorrectly remained listed as open.

PIRG recommended that consumers examine all three credit reports at least once each year, before they apply for credit. Free reports are available to consumers in Colorado, Georgia, Maryland, Maine, Massachusetts, New Jersey and Vermont.

Nationally, consumers who have recently been denied credit, are unemployed or collecting benefits, or believe themselves to be victims of identity theft or fraud may also receive a free copy of their report. In other circumstances, PIRG said, consumers will pay about $9 for a report until the Federal Trade Commission fully implements the Fair and Accurate Credit Transactions Act (FACT Act), which Congress passed last year.

The law establishes the right to a free annual credit report on request and calls for a number of changes in credit reporting to improve the accuracy of reports. Under a June 4 ruling by the FTC, the FACT Act will take effect only gradually, beginning on the west coast in December 2004 and finishing on the east coast in September 2005.

PIRG's Mierzwinski lashed out at the FTC over the nine-month rollout.

"In the last five years the FTC has fined the Big Three credit bureaus millions of dollars for not helping consumers clean up inaccurate reports, yet itrecently allowed the credit bureaus to roll out the new right to a free credit report at a snail's pace," he said. "It's shocking that most of the country needs to wait until next year to get the important rights Congress promised them last year."

U.S. PIRG also called on Congress and the state legislatures to: strengthen a consumer's private right of action to seek redress through the courts when a credit bureau or a creditor fails to protect personal information or to comply with an investigation; limit or prohibit the use of a consumer's Social Security number; and give consumers more control over who has access to their credit reports and when.

Links
* U.S. Public Interest Research Group (U.S. PIRG)
* CNN/Money article
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