As millions of Americans work to regain their financial position after a difficult year, one new investigation Consumer Reports found that more than a third of consumers have found at least one error on their credit reports, which are used to determine eligibility and pricing for loans and credit cards, apartment rentals, home purchases, policies insurance and more.
Of nearly 6,000 volunteers surveyed by Consumer Reports, 29% found errors in their personal information and 11% found errors related to their financial accounts.
Many reporting errors can lead to credit score damage, loan denials, or debt being misreported for collections, and the effect of this damage can affect other aspects of a consumer’s financial life.
According to Consumer Reports, complaints to the Consumer Financial Protection Bureau about credit reporting errors have more than doubled since 2019.
Disputing and correcting these errors can be a time-consuming and frustrating process for many consumers.
10% of respondents said they found it difficult to access their reports, and Consumer Reports noted that many of these consumers were locked out of their accounts when they were unable to answer the required identity verification questions.
“Credit reporting errors are more than just a frustrating annoyance for consumers,” said Syed Ejaz, policy analyst at Consumer Reports, in a statement. “Credit reporting errors can lower your credit score and lead to higher interest rates on loans or even prevent you from getting a job or an apartment.”
Typically, federal law requires that the three major credit bureaus – Equifax, Experian and TransUnion – allow consumers to access a free credit report each year. When the pandemic hit consumer finances, however, agencies changed their policies to allow a free report each week to help Americans keep an eye on their finances. In March, the agencies extended free weekly credit reports until April 20, 2022.
Some of the largest US banks may soon begin issuing credit cards to Americans using checking or savings account data rather than formal credit history. Wall Street Journal reported last month. JPMorgan, Wells Fargo, U.S. Bancorp and others are expected to participate in a federal pilot program designed to achieve “invisible credit “Americans.