Recent Federal Trade Commission news that there are possibly over 40 million errors per year in credit reporting, rattled consumer activists around the country. According to the report, there may be as many as one in five consumers with erroneous information on their credit reports.
So how does the American credit reporting industry get away with these errors that not only affect a person’s ability to apply for new credit along with sky high interest rates not to mention the emotional toll disputes can take? Let’s take a look at some little known facts the FTC’s report uncovered that make it very evident consumers are in need of real change when it comes to their credit history reports.
Most of the time when you try to file a dispute by phone, you’re redirected to fill out an online form. The problem with this is that once those complaints are filed- either electronically or by postal mail, they are rarely reviewed by the actual agency. A recent report from the A Consumer Financial Protection Bureau showed that out of 8 million disputes filed in 2011; only about 15 % percent were reviewed in-house by the actual credit reporting agency. So where are the other 85% sent? The majority are fed through an automated system known as eOSCAR that in turn passes them over to the allegedly responsible creditor. The biggest problem with this system is that it only labels the disputes with two codes depending on the content of the form and less than half of those are sent along with any extra information. eOSCAR also isn’t programmed to process supplemental documentation sent by consumers to support their claim.
Another fact, as related in a recent interview with three former claims handlers for Experian is that out of the dozens of cases they handled each day, they were not allowed to directly contact the consumer; instead they had to take the word of the creditor.
Numbers don’t lie however. According to the FTC, nearly 40 million consumers have this problem every year even though most credit reporting agencies claim they have procedures in place to question responses from the creditors. This type of erroneous reporting has another far reaching effect. It could send consumer FICO scores that are the most commonly used to determine credit worthiness spiraling out of control.
The expert advice for all of this? Keep a closer eye on your credit reporting history and don’t be afraid to keep pushing for a resolution.