Consumer credit reports are a very valuable tool for both consumers and lenders. They assist in determining your suitability for a loan or line of credit, and attempt to gauge your reliability as far as repayment goes. They can affect many aspects of your life: home ownership, buying a car, increasing a line of credit, joining the military, and maintaining a security clearance from the federal government. The problem with all of this is the confusion and inconsistency that surrounds this vital financial report.
There are three major credit reporting agencies: Equifax, TransUnion, and Experian. You never know which agency will be used to assess your financial stability, just as you can never be sure what will be on the report. The information listed by one agency can differ (greatly in some circumstances) from the other two, and vice versa. Typically the information listed on your credit report will be your identifying information, current and past address, number of accounts open and their statuses, and past charge-offs or other financial trouble. This is all fine and dandy until you discover a mistake.
In a 2004 report from the Federal Reserve, an estimated 79 percent of consumer credit reports contained errors, with around 25 percent of those errors being grievous enough to impact the granting of credit. Those figures are astounding, especially when you take into account the confused nature most consumers have toward their credit reports. Some never bother to check for accuracy while others pay for a service to monitor all three credit reporting agencies and alert them if there are any negative changes.
The kicker with these credit reports is that you are entitled by law to receive a copy of your individual report once each year from each of the three major credit agencies. While they all may display slightly different information, the majority of the information will match. The requesting of your annual report is quite simple, and all three reports can be requested from one website. Your score, however, which is merely a numerical designation assigned by the agency (and will vary between each agency) is not provided. To receive the score you must pay a fee for it, although the score should not be your main concern: the accuracy of the information on your report should be.
So you have found some sort of error on your report, and it is serious enough that you need to dispute it. You begin the dispute process, and you find yourself unhappy with the resolution. This occurs fairly frequently, and it is due in large part to the credit agencies enjoying the freedom to essentially do as they please. At least that’s the way it used to be, before the Consumer Financial Protection Bureau (CFPB) really started to get in to the game.
A few months ago, the CFPB established an online portal for you to file all manner of complaints against the credit agencies. The site streamlines the reporting process and lists steps to follow and how you should anticipate the resolution of your complaint. The five reasons for a complaint, as listed on their website reporting form, are as follows:
The 5 Reasons For a Complaint
- Incorrect information on my credit report
- Credit Reporting company’s investigation
- Improper use of my credit report
- Unable to get my credit report or credit score
- Credit monitoring or identity protection services
Those are the five reasons they list as being worthy enough to file a complaint. The CFPB urges you to attempt to resolve the issue through the credit agency’s dispute system, but should the outcome be less than stellar, this should be your next step.
The information on your credit report has been historically used to judge whether or not you are worthy of receiving credit from whomever decides to pull your report. The accuracy of the information likely has been wrong (don’t forget the 79% statistic), meaning you could have been affected by this and not even realized it. This is remarkably unfair, especially when you consider the amount of regulation and confusion surrounding consumer reports and the power of the three main credit agencies.
There is no time like right now to check your report and ensure the information is correct.