Correcting Credit Report Errors a Major Challenge
Feb. 2, 2015
A recent study by the FTC found that correcting errors on credit reports is becoming increasingly difficult for consumers. According to the report, 12% of U.S. consumers dispute erroneous credit reports without any resolution. Every year, millions of consumers contact credit reporting agencies, such as TransUnion, Experian and Equifax, to correct errors on their reports. The errors are most commonly due to debt that consumers claim they never owed in the first place.
Very often, such companies will insist the reports are correct, even after consumers provide court records and other proof that indicate otherwise. Incorrect credit reports can deny consumers of a mortgage or loan, which can have a ripple effect on their financial wellbeing.
Consumer protection advocates believe erroneous credit reports are created when debt buyers purchase old, often incorrect debt. Many debt collectors fail to fact check the debt they purchase from lenders and creditors, which in turn, leads to incorrect information on credit reports.
Credit reporting companies are also to blame for their laziness in properly dealing with credit report disputes. The FTC and other consumer protection advocates believe many credit reporting firms fail to follow up with such disputes because they require more time and resources than what the companies are willing to invest.
Similarly, other experts hold that credit bureaus refrain from following up on disputes because doing so lacks a profit or positive outcome for the big firms. Individual consumers do not pay the bills for larger credit bureaus, while creditors and lenders do, which simply leads to the bureaus not giving consumers the time of day.
The FTC is looking into possible solutions with regards to correcting erroneous credit reports and holding big credit bureaus responsible.