TALLAHASSEE -- One in four
credit reports contains errors serious enough to cause consumers to be denied
credit, a loan, an apartment or home loan or even a job, according to a new
survey released today by Florida PIRG.
“Most people don’t
even find out that their credit reports contain errors until it is too late—when
they have lost the loan, been denied the mortgage, or been turned down for an
apartment,” said Mark Ferrulo, Director of Florida PIRG.
Three national credit bureaus,
Equifax, Experian, and Trans Union, collect and compile information about consumer
creditworthiness from banks, creditors and from public records such as lawsuits,
tax liens and bankruptcy filings. The so-called “Big Three” each maintain
a file on nearly every adult American. The resulting credit report amounts to
a consumer’s financial résumé. The credit score calculated
from this report is a consumer’s financial SAT.
Over the last decade, Florida
PIRG and other consumer organizations have issued numerous reports showing that
sloppy credit bureau practices are at fault for errors in consumer credit reports.
“These Big Three credit
bureaus make billions of dollars selling a faulty product that jeopardizes the
good name of one in four consumers,” said Ferrulo. “Their reports
could mix you up with a total stranger or fail to report that you’ve paid
off a loan or debt. When that happens, you either pay too much for credit, or
get denied credit, insurance, a home or a job,” he continued.
Florida PIRG collected 200
surveys from adults in 30 states who reviewed their credit reports for accuracy.
Key findings include:
¨ Twenty-five percent
(25%) of the credit reports contained errors serious enough to result in the
denial of credit;
¨ 79% of the credit
reports contained mistakes of some kind;
¨ Fifty-four percent
(54%) of the credit reports contained personal demographic identifying information
that was misspelled, long-outdated, belonged to a stranger, or was otherwise
incorrect;
¨ Thirty percent (30%)
of the credit reports contained credit accounts that had been closed by the
consumer but incorrectly remained listed as open.
In December 2003, Congress passed the Fair and Accurate Credit Transactions
Act (FACT Act), which included the right to a free annual credit report on request
and a number of provisions designed to improve the accuracy of credit reports.
On June 4, the Federal Trade
Commission finalized its rule for implementing the new consumer right to a free
credit report, rolling it out over a nine-month period, beginning on the west
coast in December 2004 and finishing on the east coast in September 2005.
“The FTC caved in to
the unsubstantiated demands of the Chicken Little, Can’t-Do credit bureaus,”
stated Ferrulo. “This rule unreasonably delays access to free reports for
much of the country.”
Regardless of the delay,
Florida PIRG recommended that consumers examine all three credit reports at
least once each year, before they apply for credit. Consumers can already get
free reports in Colorado, Georgia, Maryland, Maine, Massachusetts, New Jersey
and Vermont.
Consumers who have recently
been denied credit, are unemployed or collecting benefits, or believe themselves
to be victims of identity theft or fraud may also receive a free copy of their
report. In other circumstances, consumers will pay about nine dollars for a
report until the Federal Trade Commission fully implements the new law.
Florida PIRG also called
on the Florida legislature to go beyond the FACT Act to protect consumers’
financial privacy and ensure the accuracy of credit reports. Specifically, Florida
PIRG urged the Florida legislature to strengthen a consumer’s private right
of action to seek redress through the courts when a credit bureau or a creditor
fails to protect personal information or to comply with an investigation; limit
or prohibit the use of a consumer’s Social Security number; and give consumers
more control over who has access to their credit reports and when.
“The most common reflection
of our reputation as a trustworthy consumer is our credit report, but one in
four reports is seriously flawed,” said Ferrulo. “Consumers have to
check up on the credit bureaus to make sure they are telling the truth about
us. The Florida legislature should do everything in its power to make sure these
credit reports tell a true story,” concluded Ferrulo.
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Florida
PIRG is a
statewide, non-profit and non-partisan public interest advocacy organization.
