In a recent Consumer Reports investigation, 5,858 people volunteered to obtain a copy of their credit report and look over it for errors. According to the results, over one-third of participants found at least one inaccuracy in their credit reports. The study reveals that 29% of the reports contained mistakes in personal information and 11% in account information.
“Inaccurate personal information is unlikely to affect your credit score, but it can make a credit report difficult to access,” says David Chami, managing partner of Consumer Attorneys, America’s largest background check and credit reporting law firm. “Errors pertaining to your account information are another matter, though. These mistakes can damage your credit score and need to be addressed.”
“The information on your credit report matters for so many reasons,” Chami remarks. “It determines whether or not you are approved for loans and lines of credit, and it decides the interest rate you will pay if the bank agrees to give you those loans. It can impact how much rent you will have to pay and the cost of your insurance, and can even affect whether or not you will get a job.”
Despite all this, many consumers remain blissfully ignorant of inaccuracies in their credit reports until it is too late. They only discover that the information on their credit report needs to be corrected while applying for loans.
Inaccuracies not only hurt consumers, but also lenders who rely on these reports for underwriting purposes. A lender’s ability to assess risk is dependent upon accurate information provided by a third-party data collector, so if this information is faulty, they cannot make informed decisions about whether they should extend financing options.
“The bottom line is, before you go to the bank to take out a mortgage or apply for a loan, take a moment to pull your credit report and check it for accuracy,” Chami advises. “You may find a mistake, and that mistake could cost you thousands.”
“Credit reports are not the only place where we find errors,” says Chami. “In my experience, around a quarter of all consumer reports — including credit reports, tenant/housing screening reports, and background check reports — contain a material inaccuracy. These errors impact consumers’ eligibility when they attempt to obtain credit, housing, insurance, or a job.”
Inaccuracies in consumer reports affect millions of Americans, but people are rarely aware that they need to address them. They trust the companies compiling these reports, but that trust is often misplaced.
Hundreds of Consumer Reporting Agencies (CRAs) produce reports about consumers for a variety of reasons. Most consumers are only familiar with the three national CRAs — Experian, TransUnion, and Equifax.
“These companies are in the business of collecting and selling data,” Chami notes. “They rely heavily on computer software algorithms to match information to consumer reports, and those algorithms are designed to prioritize amount over accuracy. To keep their costs down, CRAs sacrifice accuracy for profit.”
“To check for errors, you can obtain one free copy of your credit report from the national CRAs through annualcreditreport.com,” Chami explains. “You can also sign up for free monitoring through the national CRAs. However, when you do this, you often have to give the CRAs permission to gather even more of your personal information. In addition, the CRAs frequently ask you to relinquish your rights to sue in the future.”
Credit reports can be checked relatively easily, but this is not the case with other consumer reports. In the case of background or tenant screening reports, consumers tend to find out about the errors only after being denied a job or housing.
When people catch inaccurate information in a consumer report, they should call Consumer Attorneys for assistance as soon as possible. An experienced attorney will work to guide them through the process of correcting the information. Consumer Attorneys will submit a dispute to the consumer reporting agency and file a lawsuit if the error results in financial loss or emotional suffering.
“Unfortunately, errors on consumer reports are extremely difficult to correct,” Chami says. “Our credit reporting system is not designed for consumers. If you attempt the job on your own, you will realize just how uncooperative, inhospitable, and difficult the system can be.
The good news is that partnering with a knowledgeable attorney can be absolutely free. Because the Fair Credit Reporting Act requires companies furnishing inaccurate consumer information to pay reasonable attorneys’ fees, consumers rarely incur out-of-pocket costs.
Uncorrected errors on credit reports force people to pay higher interest rates and higher insurance premiums. They deny people the loans they deserve and hurt their chances for employment. Consumer Attorneys corrects these mistakes and stand up for clients’ rights when those errors cause harm.
“Our team takes pride in the work we do for consumers,” says Chami. “No matter where you live, our team can help remove inaccurate information from your consumer reports and receive the compensation you deserve.”