As millions of Americans work to regain their financial footing after a difficult year, a new investigation from Consumer Reports found that more than a third of consumers found at least one mistake on their credit reports, which are used to determine eligibility and pricing for loans and credit cards, apartment leases, home purchases, insurance policies and more.
Of the nearly 6,000 volunteers surveyed by Consumer Reports, 29% found errors in their personal information and 11% found errors related to their financial accounts.
Many errors on reports can lead to credit score damage, loan denials or debt being incorrectly sent to collections, and the effect of that damage can trickle down into other aspects of a consumer’s financial life.
According to Consumer Reports, complaints to the Consumer Financial Protection Bureau about credit report errors have more than doubled since 2019.
Disputing and correcting those errors can be a lengthy and frustrating process for many consumers.
Accessing their reports can be difficult, according to 10% of respondents, and Consumer Reports noted that many of these consumers were locked out of their accounts when they were unable to answer the required identity verification questions.
“Mistakes in credit reports are more than just a frustrating hassle for consumers,” Syed Ejaz, policy analyst for Consumer Reports, said in a statement. “Credit report errors can lower your credit score and lead to higher interest rates on loans or even prevent you from getting a job or an apartment.”
Normally, federal law requires the three major credit bureaus—Equifax, Experian and TransUnion—to allow consumers access to one free credit report each year. When the pandemic upended consumer finances, however, the bureaus changed their policies to allow one free report each week to help Americans keep a closer eye on their finances. In March, the bureaus extended the free weekly credit reports through April 20, 2022.
Some of the largest banks in the U.S. may soon start issuing credit cards to Americans using data on checking or savings accounts rather than formal credit history, the Wall Street Journal reported last month. JPMorgan, Wells Fargo, U.S. Bancorp and others are expected to participate in a federal pilot program designed to reach “credit invisible” Americans.
Free Credit Reports Extended Until April 2022—Here’s How To Get Yours (Forbes Advisor)
Will JPMorgan’s New Initiative Help “Credit Invisible” Americans Get Their First Credit Card? (Forbes)