Consumer complaints about credit report errors more than doubled last year, putting the onus on Americans to monitor their credit ratings and dispute erroneous items if necessary. Around 282,000 complaints related to credit reporting were recorded by the Consumer Financial Protection Bureau (CFPB) across 2020, compared with 136,000 in 2019.
Of these, the majority of the grievances received were to do with credit report errors, which could hold people back in their applications for personal loans (opens in new tab), credit cards, mortgages (opens in new tab) and other credit. More specifically, 141,000 of the complaints were tagged with the problem “information belongs to someone else”.
Credit bureaus under fire
The study (opens in new tab), which was conducted by the U.S. PIRG Education Fund, went on to reveal that the vast majority of credit reporting complaints – nearly 9 in 10 – involved one of the ‘big three’ credit bureaus. And between them, Experian, Equifax and TransUnion accounted for 246,000 of the complaints the watchdog received overall, making them responsible for more than half of the total received by the CFPB in the whole of 2020.
A day after the damning report was released, the ‘big three’ announced that they’d continue to provide free weekly credit reports for another year in light of the ongoing financial issues many Americans are facing as a result of the pandemic - normally, free credit reports are limited to one per year, unless you meet certain additional criteria. However, for some, this hasn’t disguised the issue at hand, as Lucy Baker, U.S. PIRG Education Fund’s consumer program fellow, said (opens in new tab):
“Mistakes in credit reports lead to lower credit scores and denial of credit, housing or employment, but under President Trump, the CFPB gave the credit bureaus a free pass from handling consumer disputes in a timely manner. That hands-off approach couldn’t have happened at a worse time. It exacerbated family finance problems during a pandemic that had already left many consumers teetering on the edge of financial ruin.”
Why do I need to dispute credit report errors?
If there are errors on your credit report, you could have a lower score without even realising it, which could be holding you back from being offered the best credit terms – and it may even be preventing you from being approved for finance altogether. This is why it’s so important to fix credit report errors, particularly if you’re thinking of applying for finance in the near future.
It can be especially important when it comes to securing a mortgage (opens in new tab), an issue highlighted by the recent finding that the credit score needed to be approved for such a loan has increased (opens in new tab). Being approved for the best personal loans will also depend on having a stellar credit score, not to mention credit cards and auto loans (opens in new tab); quite simply, if you want to stand the best possible chance of being approved for finance and getting the best terms in the process, it’s vital to make sure any credit reporting errors are fixed as soon as possible.
How to fix credit report errors
If you suspect that the credit bureaus are holding incorrect information about you, you’ll want to get it rectified as quickly as possible. It’s possible to do this yourself: you can start the process by requesting your free report via annualcreditreport.com, and from there you can analyse the information held about you to spot any inaccuracies.
If you notice an error, write to the relevant bureau with details of the information you think is inaccurate, together with copies of any supporting documents to back up your claim. The bureau then has 30 days in which to investigate, during which time it must forward the data to the organization that originally provided the information in order for them to review it, after which it must either delete, update or verify the information held.
Yet it isn’t always as simple as that, and it may be the case that the original organization challenges your claim. This is where it can start to get tricky, and is why many people choose to seek specialist credit repair services (opens in new tab) instead. These companies will deal with the credit bureaus on your behalf to expunge the offending information from your credit history, and typically have much higher success rates than if you were to go it alone. Some can even guarantee an improved rating as a result of their work, so for many, investing in their services could be worthwhile.