Study: 1 in 5 had credit-report error

Tuesday, February 12, 2013

— One in five consumers had an error in a credit report issued by a major agency, according to a government study released Monday.

The Federal Trade Commission study also said that 5 percent of the consumers identified errors in their reports that could lead to them paying more for mortgages, auto loans or other financial products.

The study looked at reports for 1,001 consumers issued by the three major agencies - Equifax, Experian and TransUnion. The commission hired researchers to help consumers identify potential errors.

The study closely matches the results of a year-long investigation by The Columbus Dispatch. The Ohio newspaper’s report last year said that thousands of consumers were denied loans because of errors on their credit reports.

“These are eye-opening numbers for American consumers,” said Howard Shelanski, director of the Federal Trade Commission’s economics bureau. “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 commission said the findings highlight the importance of consumers checking their credit reports.

Consumers are entitled to a free copy of their credit report each year from each of the three reporting agencies.

“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 trade commission’s consumer-protection bureau.

The Federal Trade Commission study also found that 20 percent of consumers had an error that was corrected by a reporting agency after the consumer disputed it. About 10 percent of consumers had their credit score changed after a reporting agency corrected errors in their reports.

The Consumer Data Industry Association, which represents the credit reporting agencies and other data companies, said the commission’s study showed that the proportion of credit reports with errors that could increase the rates consumers would pay was small.

The study confirmed “that credit reports are highly accurate, and play a critical role in facilitating access to fair and affordable consumer credit,” the association said in a statement.

In September, the federal Consumer Financial Protection Bureau gained the authority to write and enforce rules for the credit-reporting industry and to monitor the compliance of the three agencies. Before that, the reporting agencies weren’t subject to ongoing monitoring by federal examiners.

The bureau has not taken public action against the agencies. However, it is accepting complaints from consumers who discover incorrect information on their reports or have trouble getting mistakes corrected. The agencies have15 days to respond to the complaints with a plan for fixing the problem; consumers can dispute that response.

By contrast, the Federal Trade Commission can take action only if there is an earlier indication of wrongdoing. It cannot demand information from or investigate companies that appear to be following the law.

Information for this article was contributed by Marcy Gordon and Daniel Wagner of The Associated Press and Jim Puzzanghera of the Los Angeles Times.

Business, Pages 23 on 02/12/2013