In a recent report on the United States credit industry, the Federal Trade Commission found 5 percent of consumers had a credit report error that could damage their credit rating and result in less favorable loan terms.
Howard Shelanski, director of the FTC’s Bureau of Economics, called the findings “eye-opening” and recommended that Americans routinely check their credit reports. “If they don’t, they are potentially putting their pocketbooks at risk,” he says.
Credit reports collect and preserve detailed information about financial history and bill payments and are important factors in applications for car and home loans. Any credit report error can increase the price of a loan or even lead to a rejection. Furthermore, identity theft is yet another potential concern for consumers whose credit reports contain errors.
The FTC asked one thousand participants to check their credit reports and then attempt to resolve discovered errors. The study found the problem of credit errors is widespread in the United States, with many consumers in the study unearthing errors that could negatively affect their scores. As part of the study, participants who saw errors filed disputes with the credit reporting company.
In the end, four out of five consumers received a correction that put them on better terms for future loans.
The FTC reported that, according to federal law, every American is eligible to receive a free credit report once a year from all three of the national credit reporting companies. Consumers can access free reports at AnnualCreditReport.com and get results online, by phone or via regular mail. Online requests allow instant access, if time is of the essence.
If an error is found, the FTC recommends contacting the credit reporting agency immediately with a request to fix the error. The FTC also suggests contacting the business that reported the erroneous information and asking them to fix it right away; in fact, contacting the business directly is usually the most direct and fastest way to resolve errors.
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