The real problem with credit reports is the astounding number of errors
One in five credit reports has ERRORS on them. Don’t take my word for it, here is a report from CNBC:
The Errors cause the following issue to consumers:
- Denial
- Higher Rates
- Higher Premium
Here are the HIGHLIGHTS of the Study:
Errors arise because credit furnishers do not have sufficient incentives to provide the most accurate data. Half or more of medical bills have a billing error, according to research from NerdWallet. Debt that has been sold to third-party collectors may never get properly accounted for even when paid.
Equifax is not responsible for the accuracy of your credit report; you are. If you don’t know your credit report, how do you know there is a mistake? After years of fighting, Congress finally required credit bureaus to make credit reports free to consumers once a year. Uptake is strong, as 40 million consumers obtain at least one credit report annually, although not always for free.
When they get their report and see errors, consumers act. Eight million times a year, consumers contacted one of the big three credit reporting agencies to dispute information. Yet the dispute system is not designed to get to fix the problem. The credit bureau is only legally required to check with the creditor or debt collector and ask them whether they stand by their claim. As long as the creditor says you owe money, the dispute is resolved in their favor. As the National Consumer Law Center concludes: “Credit bureaus have little economic incentive to conduct proper disputes or improve their investigations.”
