Shocking News: The Federal Trade Commission (FTC) study found that one in five Americans had an error in their credit report. Who is at fault?
As part of the Fair and Accurate Credit Transactions Act of 2003, Congress mandated the FTC to conduct a study of all the groups that participate in the credit-reporting and scoring process. The latest study, based on data from more than 1,000 participants, is the agency’s fifth interim report to Congress on this topic. The final report is due in 2014. According to the U.S. Census Bureau, there were 173 million credit cardholders in the United States in 2006 and that number is projected to grow to 181 million in 2010. Given the huge number of credit subjects, perhaps the sample of 1,000 is not representative.
The FTC found high error rates in credit reports from the three major credit agencies – Experian, Equifax and TransUnion – in its ongoing study of the credit-scoring process. One in four participants in the study found errors in at least one of their reports from the three major agencies. The FTC stated that 1 in 5 American consumers had at least one error in their credit reports which could impair their credit standing and could lead to higher cost of borrowing.
Experian officials downplayed the criticism. The FTC report “confirms that consumer credit reports are predominately accurate” and that “the vast majority of errors on credit reports have no bearing on credit scores,” a spokesman for Experian said in an email. Yet Experian “is not satisfied with this result and we continue to work toward ensuring credit reports are 100% accurate.”
Experian has published recently the results of a survey and expressed the following concerns.
- Financial services companies do not consolidate their customer data effectively, which leads to inaccuracies and waste.
- There was a concern over the accuracy of banks’ customer data. Of the 161 financial-services employees who responded to the survey, 91% suspect that some of their institution’s customer data is wrong.
For further details click on this link: https://2018.biia.com/survey-finds-flaws-in-banks-handling-of-customer-data
The lending and credit card institutions are the primary sources for the data processed by the credit bureaus. The FTC should step up to the plate and force the financial services industry to improve the quality of customer data before it is send to credit bureaus. Regrettably press comments focused entirely on the credit bureau industry as ‘primary the source of errors’.
Source: The Washington Post and American Banker