One in three consumers spotted errors in credit reports, study finds

Some 34% of Americans who volunteered to check the accuracy of their credit reports earlier this year found errors, according to new research from Consumer Reports.

The most frequently identified mistakes involved erroneous personal information, such as wrong addresses and misspelled names, but 11% of the participants found accounts that they did not recognize, payments that were falsely flagged as late, or other incorrect information related to their debts, the consumer advocacy group said in a report Thursday.

Consumer Reports called on the Consumer Financial Protection Bureau and the Federal Trade Commission to establish stronger accuracy regulations and to penalize companies for any violations of the Fair Credit Reporting Act.

“Credit report errors can lower your credit score and lead to higher interest rates on loans or even prevent you from getting a job or an apartment,” Syed Ejaz, a policy analyst for Consumer Reports and the author of the paper, said in a press release.

The findings offer fresh ammunition for critics of the U.S. credit reporting system. Consumer Reports was critical of Equifax, Experian and TransUnion, but it noted that errors can also be introduced by lenders and other companies that furnish data to the big three credit reporting agencies.

A Federal Trade Commission study in 2013 found that one in five U.S. consumers had an error on at least one of their credit reports, and that 5% of consumers had an error that could result in their paying more for financial products.

And since the start of the pandemic, the number of complaints received by the Consumer Financial Protection Bureau each month from consumers who say that their credit reports contain incorrect information has soared.

Francis Creighton, president of the Consumer Data Industry Association, which is a trade group for the credit reporting industry, criticized the research by Consumer Reports as “hastily compiled” and not done in an empirical manner.

“While individual checks are vital, we caution Consumer Reports not to draw too many conclusions from non-empirical surveys of consumers,” Creighton said in an email. “Accuracy is the bedrock of the credit reporting industry and getting credit reports right for consumers is our most important job.”

Last month, executives from Equifax, Experian and TransUnion appeared before a House financial service subcommittee, where they faced questions about erroneous information in consumer credit reports.

During the hearing, House Financial Services Committee Chairwoman Maxine Waters, D-Calif., described the nation’s credit reporting system as broken — a characterization that executives at the credit reporting companies disputed.

Experian is making continual progress in eliminating errors even before consumer data is submitted to the company, Sandy Anderson, senior vice president of operations for Experian North America, said in comments at the May 26 congressional hearing. She also stated that the firm’s online dispute portal makes it easy for consumers to submit disputes and receive the results.

Beverly Anderson, president of global consumer solutions at Equifax, noted at the same hearing that the consumer complaints filed with the CFPB against credit reporting companies often involve information provided by lenders. She attributed some of the recent uptick in CFPB complaints to consumers checking their credit reports more frequently amid the economic uncertainty of the last year.

When TransUnion finds that it is receiving consumer disputes at higher rates from particular data furnishers, it works with those companies to try to correct the problem, testified John Danaher, the company’s executive vice president for consumer interactive. If the problem does not get fixed, TransUnion may eventually stop those companies from reporting data, he added.

The study by Consumer Reports was based on more than 5,800 responses to an online survey conducted between Feb. 1 and April 1, 2021. Participation in the study was voluntary and therefore not representative of the country as a whole, the report stated.

In addition to calling for tougher regulations, Consumer Reports recommended that U.S. consumers be given greater control over their credit information, including by providing free access to credit reports and scores at any time. Today, consumers are entitled to receive one copy of their credit report from each of the three major companies every 12 months. Since the start of the pandemic, Equifax, Experian and TransUnion have been allowing consumers to access their credit reports weekly for free.

During the 2020 presidential campaign, then-candidate Joe Biden embraced the idea of a public credit reporting agency, but the idea has not gotten off the ground since Biden became president.

Kevin Wack contributed to this story.