The Federal Trade Commission has released a study (FTC pdf) concerning credit reports and errors on them that could adversely affect individuals’ finances. The FTC says in a news release, “The FTC report is the first major study that looks at all the primary groups that participate in the credit reporting and scoring process: consumers; lenders/data furnishers (which include creditors, lenders, debt collection agencies, and the court system); the Fair Isaac Corporation, which develops FICO credit scores; and the national credit reporting agencies (CRAs). […] Consumers in the study were selected to match the demographic and credit score information of the general public, and participants were encouraged to dispute errors that could affect their credit standing.”
Note that the FTC did consider consumer privacy issues when conducting this study. The report says, “In light of the potentially sensitive nature of the information being collected by this study, substantial care has been taken to establish procedures that protect the privacy and security of personal data. Chief among these procedures are the following: maintaining credit-related data separately from personal identifying information; requiring the FTC’s contractors to execute confidentiality agreements, including specific contractual obligations that address the privacy and security of the data; and limiting access to data to FTC and contractor personnel who needed to work with the data during the course of the study.”
Here’s more from the FTC on the study:
A Federal Trade Commission study of the U.S. credit reporting industry found that five percent of consumers had errors on one of their three major credit reports that could lead to them paying more for products such as auto loans and insurance.
Overall, the congressionally mandated study on credit report accuracy found that one in five consumers had an error on at least one of their three credit reports. […]
The study, in which participants were encouraged to use the Fair Credit Reporting Act (FCRA) process to resolve any potential credit report errors, also found that:
- One in four consumers identified errors on their credit reports that might affect their credit scores;
- One in five consumers had an error that was corrected by a credit reporting agency (CRA) after it was disputed, on at least one of their three credit reports;
- Four out of five consumers who filed disputes experienced some modification to their credit report;
- Slightly more than one in 10 consumers saw a change in their credit score after the CRAs modified errors on their credit report; and
- Approximately one in 20 consumers had a maximum score change of more than 25 points and only one in 250 consumers had a maximum score change of more than 100 points.