Congress to Hear Earful on Credit Report Errors

Congress is about to get an earful on how hard it is to fix errors in credit reports thanks to incoming House Financial Services Chairman Barney Frank.

Last week, Frank said he plans to hold hearings on the matter after reading a Boston Globe story on the "glacial and ineffectual response of the three giant keepers of consumer credit records — Experian, Equifax, and TransUnion — to any errors in their files, even those that appear to result from fraud."

Such errors can wreak havoc on consumers who are denied credit as a result or end up hunted by collection agencies for debts they never incurred.

By law, creditors have to correct mistakes without damaging your credit. In reality, they make it difficult to do so. Thanks to a 2003 law that provides access to free credit reports, consumers can now catch errors faster, but they may not be able to fix them quickly. The Federal Trade Commission received about 255,000 complaints related to credit report screw-ups last year alone, according to the Boston Globe.

"If you can’t correct the report, that’s a problem," Frank told the Boston Globe.

Whether the hearing will lead to any legislation is iffy. But a public airing of what consumers have to endure to fix a mistake on their credit report is long overdue, says Evan Hendricks, author of Credit Scores & Credit Report.

Hendricks said the credit reporting bureaus promised to clean up their act in the early 1990s. Congress passed amendments to the Fair Credit Reporting act in 1996 and again in 2003, yet many of the same problems persist.

The crux of the problem, Hendricks says, is the credit reporting agencies rely on automated systems to the exclusion of anything else.

When asked what Chairman Frank might focus on during the hearing, Hendricks suggests having the Big Three reporting agencies do a study to figure out how many reports have errors. Estimates over the years have varied from 1 percent to 60 percent. "The credit reporting bureaus themselves will criticize reports yet they’ve never done their own study and they’re sitting on all the data," Hendricks said.

Greg Fisher who has been running creditaccuracy.com since 2000, and creditscoring.com since 1998 hopes Frank will get to the bottom of this question:

Why does an Equifax credit report disclose an account number with fewer digits than the Equifax report consumers can get from a third-party credit report vendor? The law requires that the credit reporting agencies provide "all information in the consumer’s file."

Source: Washington Post – Annys Shin

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