26% of Consumers Find at Least One Error on Their Credit Reports

26% of Consumers Find at Least One Error on Their Credit Reports
STUDY
Steven Tumulski
By: Steven Tumulski
Posted: May 6, 2013
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In 2004, Congress initiated a 10-year project to study the accuracy of the credit reporting industry. The results are published in two-year increments. The most recently published results prove to be rather alarming.

The study found 26 percent of consumers found at least one error on their credit reports. Five percent of consumers found errors on their reports that could negatively affect their terms for loans and insurance.

Each of the 1,001 volunteers were given access to their most recent credit reports from all three major bureaus (Equifax, Experian and TransUnion).

They were asked to review the reports for errors and report their findings. They were then guided through the dispute process with all three bureaus to yield their new score.

“Twenty-six percent of consumers found at

least one error on their credit reports.”

The study found most of the errors (about 235) only had a moderate impact on a study participant’s credit score. But, with interest rates dependent on credit tiers, even a moderate impact can result in a significantly higher interest rate.

Furthermore, those participating in the study were self-selected. This indicates the sample selection for the study isn’t entirely sufficient.

In order for the study to be truly representative of credit reporting industry errors on the whole, a random sample of scores would be needed.

Unfortunately, such an undertaking isn’t possible. Without having a participant volunteer, there’s no way to review the report for accuracy.

While the Federal Trade Commission admits the results of the study may not match the actual percentage of errors found “in the wild,” they do note it’s important to check your score regularly for inaccuracies and use the dispute process to have them corrected.

Source: The Federal Trade Commission. Photo source: kiplinger.com.