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Credit report errors a big problem
One in four credit
reports contains errors serious
enough to cause consumers to be denied credit, a loan, an apartment
or home loan or even a job, according to a survey released by U.S.
PIRG. "The big credit bureaus
and big business tolerate big mistakes in credit reports,"
said Ed Mierzwinski , U.S. PIRG Consumer Program Director. "But
those mistakes ruin the financial reputations of hardworking Americans."
Three national credit bureaus, Equifax, Experian,
and Trans Union, collect and compile information about consumer
creditworthiness from banks, creditors and from public records such
as lawsuits, tax liens and bankruptcy filings. The so-called "Big
Three" each maintains a file on nearly every adult American.
The resulting credit report amounts to a consumer's financial résumé.
The credit score calculated from this report is a consumer's financial
SAT. Over the last decade, the state PIRGs and other consumer organizations
have issued numerous reports showing that sloppy credit bureau practices
are at fault for errors in consumer credit reports.
"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," said Mierzwinski.
U.S. PIRG collected 200 surveys from adults
in 30 states who reviewed their credit reports for accuracy. Key
findings include:
- 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misspelled, long-outdated, belonged to a stranger, or was otherwise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.
In December 2003, Congress passed the Fair
and Accurate Credit Transactions Act (FACT Act), which included
the right to a free annual credit
report on request and a number of provisions designed to improve
the accuracy of credit reports. On June 4, the Federal Trade
Commission finalized its rule for implementing the new consumer
right to a free credit report, rolling it out over a nine-month
period, beginning on the west coast in December 2004 and finishing
on the east coast in September 2005.
"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 recently allowed the credit bureaus to roll
out the new right to a free credit report at a snail's pace,"
said Mierzwinski. "It's shocking that most of the country needs
to wait until next year to get the important rights Congress promised
them last year."
Regardless of the delay, PIRG recommended that
consumers examine all three credit
reports at least once each year, before they apply for credit.
Consumers can already get free reports in Colorado, Georgia, Maryland,
Maine, Massachusetts, New Jersey and Vermont. 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,
consumers will pay about nine dollars for a report until the Federal
Trade Commission fully implements the new law.
U.S. PIRG also called on Congress and state legislatures
to finish the job and to go beyond the FACT Act to protect consumers'
financial privacy and ensure
the accuracy of credit reports. Specifically, U.S. PIRG called on
Congress and 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.
U.S. PIRG is the national lobbying office for
state Public Interest Research Groups. State PIRGs are public interest
advocacy organizations with offices around the country. U.S. PIRG's
consumer webpage is at http://www.pirg.org/consumer
.
For More Information: Ed Mierzwinski
(202) 546-9707
See
PIRG study PDF
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