If you didn’t see Sunday’s edition of 60 Minutes on CBS, you missed a startling report that suggest up to 40 million mistakes are wreaking havoc on Americans’ credit histories. The report was based on a new study from the FTC that was released hours after the report aired. Now, Americans are wondering whether their own credit reports are accurate. There’s a very good chance that they’re not; after all, FTC is estimating one in five have errors. The fact that other reports and studies vary greatly in terms of how many are affected should serve as proof that there are big problems. And folks are more than a little upset. These errors can hinder their efforts of getting approved for new home, credit cards or could even prevent them from landing that new job.
The 60 Minutes report was delivered by CBS’ Steve Kroft, who knows a thing or two about error- ridden credit reports.
Besides having financial consequences, the whole dispute process takes an emotional toll on people,
CBS journalist Steve Kroft said in an extended interview late Sunday.
It’s just really hard sometimes to get these things fixed. You feel like…there’s no way to break through. After a while I think people sometimes start to question their own sanity…so we decided to show the consumer what it’s like.
His interview, as many knew it would be, proved quite controversial. Kroft should know better than anyone how frustrating this kind of problem is. Controversial or not, it affected him in ways many journalists can relate to when they discover they are more than the ones delivering the news, they’re actually playing a role in it. For more than two years, Kroft has battled to have an error removed from his own credit report.
Just as millions of American can attest to, Kroft has experienced the frustration of waiting on the lines to speak to a customer service representative only to find himself struggling with trying to have an intelligent conversation with someone in another country and who has trouble understanding what’s being said because the translation is getting lost in language barriers. Kroft said even after an extended amount of time on the phone, he was ultimately told to fill out a form online. It’s what Kroft found out later, though, that have many Americans reeling. Once the forms are submitted, they are hardly ever reviewed by the credit bureaus.
The Consumer Financial Protection Bureau found in its own investigation that more than 32 million disputes were filed by consumers in 2011 and of those disputes, the three major credit bureaus fielded perhaps only 15 percent of them. The rest were outsourced. That outsourcing becomes part of a massive system known as eOscar. This reporting process ultimately parks the complaint in the laps of the consumers reporting the information. From there, even if the consumers are able to provide the proper proof of an error, the system is unable to allow additional information and documentation to be included for submission back to the credit bureaus. It’s a very limiting system that is lacking.
Two other significant reports on consumer credit reporting accuracy have shield different lights on the collective picture in recent years. The first of those reports was conducted by the U.S. Public Interest Research Group in 2004. At that time, it was estimated that close to 80 percent of reports are erroneous in some kind of way way. Two years ago, in 2011, the Policy and Economic Research Council released its own independent report that was significantly different than any other: it found less than 1 percent of consumers had potentially damning errors on their reports. Of course, we know that’s not accurate, but it does provide insight into motives of others. More importantly, it shows that there’s no definitive measuring stick in place that ensures the proper and accurate data collection.
When FTC reviewed 1,000 consumers’ credit reports recently, it was discovered that up to 25 percent of people had at least one error that could drastically affect their credit score. And once the errors were disputed, one in ten consumers saw their FICO scores increase, including five percent who saw at least a 25 point bump.
These are eye-opening numbers for American consumers,
Howard Shelanski, Director of the FTC’s Bureau of Economics, said in a statement Monday.
The results of this first-of-its-kind study making it clear that consumers should check their credit reports regularly. If they don’t, they are potentially putting their pocketbooks at risk.
In the FTC study, there’s no doubt that the most common errors involved information furnished by credit lenders (13.8 percent) and debt collectors (7.5 percent). Despite Shelanski’s assertions, for too many consumers, righting the wrongs is challenging at best.
As part of the investigation conducted by Kroft, it’s discovered that many of the “handlers” with the credit bureaus – or at least the three largest credit bureaus – are out of reach for anyone attempting to contact them for questions on how they do their jobs. Three of those representatives were located in Chile and agreed to play a role in Kroft’s efforts. What Kroft discovered is disturbing. Each of the three now-former employees handled 90 cases every day. Unfortunately, “handled” is the operative word – and the shortcoming. Not only were the employees prohibited from contacting consumers whose credit reports were about to be affected, but they were also training to take the word of the credit card company, bank or collection agency. Most were legitimate; too many were not.
As part of the CBS investigation, efforts were made to interview current spokespersons from the three bureaus – Experian, Transunion and Equifax. All declined, though public statements were released on Monday. Experian said it has procedures that do allow employees to correspond directly with the “data furnishers”. No word on whether employees inside the bureaus had direct access to the consumers, though.
While most can see these kinds of errors as frustrating realities, the fact is, there are many who are unable to get their errors resolved. This means they are unable to buy a home, qualify for a credit card and in many cases, qualify for a great career position – all because of the erroneous black marks on their histories with the credit bureaus. In the interview, Judy Thomas told Kroft that she’s spent more than six years in an attempt to convince the credit bureaus that her identity had been stolen. It was until years into her struggles that she realized the credit reports she was looking at were not the same ones creditors saw. But there was another discover that had her worried. The bank’s copy of her credit report showed an alias for Thomas. The problem is, she’s never went by any other name. The bureaus admit they are unable to verify much of the information sent to them by any consumer. Worse, credit bureaus would far prefer the opportunity to pay a $1 million or more fine rather than tackle the compliance guidelines. It’s simply easier to do that versus put into place changes that would improve accuracy.
Now, though, and as always – the cyber thieves are coming out in droves, all with their misleading promises of repairing reports for consumers. For a hefty price, mind you. Not getting drawn into these deceitful practices is crucial, since they often do little more than add to the frustrations for consumers. Consumers are encouraged to visit www.annualcreditreport.com for a copy of their reports from all three credit bureaus. These are free for consumers once a year and anytime they’re denied credit or a job. Also, new laws went into effect this week regarding the way employers can use information gleaned from credit pulls. Consumers can also dispute anything on their reports and are encouraged to do so through this avenue. Remember, too, that if the errors are being shown on all three of your credit reports, you will need to file disputes individually with each one.
Have you discovered any errors on your reports? If so, have you been able to resolve it? How long did it take? Share your story with us and let our readers know what worked best for you.
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