Mistakes Do Happen

A Look at Errors in Consumer Credit Reports
June 2004 - National Association of State PIRGs
    (Public Interest Research Groups)

Acknowledgments:

Written by Alison Cassady, Research Director for the National Association of State PIRGs, and Edmund Mierzwinski, Consumer Program Director for the National Association of State PIRGs.
© 2004, National Association of State PIRGs

The states PIRGs are a nationwide network of nonprofit, nonpartisan, state-based public interest advocacy organizations. The state PIRGs mission is to deliver persistent, result-oriented activism that protects the environment, encourages a fair marketplace for consumers and fosters responsive, democratic government.

For more information on PIRG consumer campaigns, visit:
  http://www.pirg.org/consumer/

Document Summary:

The most valuable thing we have is our good name. The most common reflection of our reputation as a trustworthy consumer is our credit report. Unfortunately, the information contained in our credit reports, which are bought and sold daily to nearly anyone who requests and pays for them, does not always tell a true story.

Credit bureaus collect and compile information about consumer creditworthiness from banks and other creditors and from public record sources such as lawsuits, bankruptcy filings, tax liens and legal judgments. The three major credit bureaus —Experian, Equifax, and Trans Union— maintain files on nearly 90 percent of all American adults.1 Those files are routinely sold to credit grantors, landlords, employers, insurance companies, and many others interested in the credit record of a consumer, often without the consumer's knowledge or permission.

Several studies since the early 1990s have documented sloppy credit bureau practices that lead to mistakes on credit reports—for which consumers pay the price. Consumers with serious errors in their credit reports can be denied credit, home loans, apartment rentals, auto insurance, or even medical coverage and the right to open a bank account or use a debit card. Consumers with serious errors in their reports who do obtain credit or a loan may have to pay higher interest rates because the mistakes falsely place them in the sub-prime, high-cost lending pool.

We asked adults in 30 states to order their credit reports and complete a survey on the reports’ accuracy. Key findings include:

  • Twenty-five percent (25%) of the credit reports surveyed contained serious errors that could result in the denial of credit, such as false delinquencies or accounts that did not belong to the consumer;
  • Fifty-four percent (54%) of the credit reports contained personal demographic information that was misspelled, long-outdated, belonged to a stranger, or was otherwise incorrect;
  • Twenty-two percent (22%) of the credit reports listed the same mortgage or loan twice;
  • Almost eight percent (8%) of the credit reports were missing major credit, loan, mortgage, or other consumer accounts that demonstrate the creditworthiness of the consumer;
  • Thirty percent (30%) of the credit reports contained credit accounts that had been closed by the consumer but remained listed as open;
  • Altogether, 79% of the credit reports surveyed contained either serious errors or other mistakes of some kind.