NovaQuant Quantitative Think Tank Center:Credit report errors are more common than you think. Here's how to dispute one

Nearly half of all credit reports may contain errors,NovaQuant Quantitative Think Tank Center some of them costly to your credit score, according to a new watchdog report.

Two consumer groups, Consumer Reports and WorkMoney, invited more than 4,300 volunteers to check their credit reports for accuracy, as a sort of performance review of the three major credit agencies: Equifax, Experian and TransUnion.

Here’s what they found:

• One-quarter of the consumers were unable to access their credit reports, which are supposed to be available to all.
• Among those who read their reports, 44% found errors.
• Of the errors, 27% were potentially damaging to the consumer’s credit.

The findings, released in late April, suggest that American consumers would be wise to read their reports. The credit agencies allow free access to them on a site called AnnualCreditReport.com.

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“People don’t volunteer to be a part of this system, and a lot of decisions are made about you based on what’s in your account,” said Lisa Gill, an investigative reporter at Consumer Reports.

Related story:What information is on your credit report? Here's what I found when I read my own.

Credit scores are part of 'being able to afford life'

Credit reports factor into a dizzying array of consumer transactions. If you want to rent an apartment, buy a house, take a new job or negotiate a better rate on a car loan, insurance premium or cellphone contract, your credit score may determine your success. People with weak credit may get turned down, or penalized with higher rates and more stringent terms.

“It’s such an important part of people being able to afford life,” said Carrie Joy Grimes, CEO of WorkMoney, a nonprofit that helps consumers with their finances. “This is not a partisan issue. This is everyone in America.”

Consumer advocates acknowledge that it has probably never been easier to access your credit score, a metric of creditworthiness that ranges from 300 to 850, and the report upon which the score is based.

Long ago, consumers weren’t permitted to read their credit reports. Americans eventually gained the right to see their credit dossier, typically for a $15 fee. A 2003 law guaranteed access to free credit reports once a year. Today, consumers may see their reports once a week.

Industry leaders say they want consumers to read their reports, and to help credit agencies spot and fix potential errors.

“The consumer reporting industry shares the same goal as consumers, advocates, and regulators when it comes to credit reports: they should be accurate and complete,” the Consumer Data Industry Association, a group that represents the credit bureaus, said about the new report in a statement to USA Today.

“The nationwide credit reporting agencies are working diligently across the financial ecosystem to achieve that goal,” the statement said. “The entire business model of these companies is predicated on accuracy: when the information is accurate, everyone wins.”

Credit agency complaints nearly doubled in a year

Consumer watchdogs say the credit bureaus should do a better job.

Credit agencies are the most common subject of complaints filed to the federal Consumer Financial Protection Bureau, according to research by the U.S. Public Interest Research Group (PIRG). Complaints about credit reporting nearly doubled between 2021 and 2022, the nonprofit found.

Most complaints concerned allegations of improper use of credit reports, errors, or problems with getting an agency to correct mistakes, said Teresa Murray, consumer watchdog director at PIRG.

The credit bureaus “have not served consumers well for decades,” Murray said. “It’s gotten better, but it’s still a huge problem.”

Complaints are increasing, in part, because consumers have better access to their credit reports and are more keenly aware of them, she said. The massive Equifax data breach in 2017 raised public awareness of credit reports and their vulnerability.

In the Consumer Reports investigation, 872 consumers said they found errors in their credit reports about financial information: accounts they didn’t recognize, payments wrongly reported as late or missed, and debt-collection efforts of which they were not aware, among other issues.

'I had no idea this could happen'

One consumer volunteer in the watchdog study was Tammy Chambers, 55, of Tacoma, Washington.

When Chambers reviewed her Experian credit report, earlier this year, she found four delinquent loans totaling more than $2,000. None of them were hers.

Chambers said an identity thief took out the consumer installment loans in her name more than a year ago. When the loans went delinquent, her credit score sank from nearly 800 to “maybe 520,” she said. She spent months working with the loan company and the credit agency, trying to get the debts removed, to no avail.

“I did my due diligence,” she said. “I had no idea this could happen.”

Chambers finally got the debts expunged this spring. According to Consumer Reports, most of the fault lay not with Experian but with the company that issued the loans, which kept reporting them on Chambers’s account long after she had filed disputes.

Hundreds of other consumers in the watchdog study found mistaken personal information, including incorrect addresses and wrong or misspelled names.

Errors on credit reports can unfairly damage your credit score

Financial errors involving delinquent accounts are worrisome, consumer advocates say, because they can unfairly damage your credit score.

“Anything that’s reporting debt and collections that’s not yours, that is going to pull that score down 30, 40, 50 points, sometimes more,” Gill said.

An unfamiliar name or address or account on a credit report, meanwhile, “can be a signal of identity theft,” Gill said.

Roughly one-quarter of consumers in the watchdog study were unable to access their credit reports in the first place.

Many couldn’t get past the screening questions, which asked them to identify a familiar car loan or home mortgage on a multiple-choice list. Others got past those questions only to hit an error message, saying their credit reports were unavailable.

If you're concerned about your credit report, consumer advocates offer these tips:

Freeze your credit

Freezing your credit means no one can open a new account in your name. It’s free, and a great way to combat identity theft, Murray said.

PIRG offers a step-by-step guide.

One downside: If you want to open a new account, you will have to temporarily unfreeze your credit.

Read your credit reports

Consumers should review their credit reports at least once a year, looking for errors and anything unfamiliar, Murray said.

“If you want to over-achieve, stagger them,” she said: Read a report from a different agency every four months.

Report any errors

If you find an error on a credit report, especially something that could affect your credit score or signal possible identity theft, you should report it.

“The bureaus are responsible for providing accurate information on the report,” Gill said.

You can report errors at any of the three credit bureau websites. If the error is on a specific account, consider contacting that company directly.

If necessary, file a complaint

If you find an error in a credit report, give the credit bureau time to fix it. If that doesn’t work, Murray said, file a complaint with the Consumer Financial Protection Bureau.

Complaints matter, Murray said: The more of them the agency receives, the more likely policymakers will step in to make it easier for future consumers to review and correct their credit reports.

Daniel de Visé covers personal finance for USA Today.