There are three main credit bureaus that are in charge of providing credit reports on individuals in United States. According to a study by the Federal Trade Commission over 25% of all credit reports have errors on them. Many individuals already know that there currently is, or has been a mistake on their credit report in the past. Some people don’t realize what an impact this could have on their lives, and so don’t do anything about it, or don’t know how. Others know that this could have disastrous and expensive results, so they try to do something about it but the process is difficult and frustration, and all too often fruitless.
Having mistakes on a credit report can cause a lot of problems for the consumer, and can even mean there are bigger issues going on. For example, an error about a missed or late payment (or several), missing information about paid credit bills, or any other things that could show up on a report and affect a score can make life more expensive in a lot of ways. If a credit score gets worse then it is more difficult to get loans, and if loans are still granted then they could be given at a much higher interest rate. That could mean paying much more money in interest on a home mortgage, car loan or other loans.
In addition to affecting loan availability and price, it could also prevent people from gaining security clearances for certain military and civilian jobs. Mistakes on a credit report could also indicate issues with identity theft. This is a much bigger problem and it affects many people every year. Mistakes on credit reports are obviously a huge problem. But, what can be done?
At the beginning of September The Consumer Financial Protection Bureau announced new regulations to help improve peoples’ ability to deal with mistakes on their credit report. In the past, too many people have tried to correct mistakes but found that banks and other lending agencies have too much power. When they try to dispute something on their credit score some agencies refuse to make any changes even after they admit that they are the ones in error! This should change with the new regulations.
The newly announced regulations on the credit reporting industry require the three major firms, and all the agencies that provide them with information about the consumers to take complaints more seriously. Now these companies will have to look at every bit of information that the consumer supplies about the prospective error and consider the entire file. In the past most of the details were lost to save time in the process. Now they will be forced to consider receipts and other documents as proof to fix mistakes.
While this new system isn’t perfect, it will surely help consumers who are plagued with bad credit scores because of mistakes on their credit report. It is a big step in the right direction for consumer protection.