Credit Report Error Rates Vary Wildy, Depending on Study Authors

Credit report error rates vary wildly, depending on who you believe, from less than 1% to almost 80%.  There have been a small number of studies conducted on the topic and another is set to be released by the FTC before the end of 2012.  We’re all waiting on the edge of our seats to see the results of the FTC study.

The latest study was conducted by The Columbus Dispatch.  The newspaper collected and analyzed tens of thousands of consumer complaints filed with the Federal Trade Commission (FTC) against the three credit bureaus – Equifax, Experian and TransUnion.

Highlights of Columbus Dispatch Study

Approximately 25 percent of the complaints filed with the Federal Trade Commission involved mistakes about credit cards, mortgages and car loans.

More than 5 percent of the complaints dealt with incorrect basic personal information, such as birth dates, addresses or Social Security numbers.

More than 5 percent of those who complained to the Federal Trade Commission  said their reports listed an account that was not theirs.

Almost 200 people said their credit reports listed them as dead, which made it impossible for them to get credit.

FTC Complaints

Approximately 21.500 consumers complained about their credit files to the Federal Trade Commission over the past 2 ½ years, beginning in 2009.  Almost six percent (1,252) complained that their credit files had been mixed with another person’s. Of this group, 30 percent complained the credit reporting agencies failed to correct the mistakes after they requested the change.  Here is a breakdown of this group:

75 percent identified the other person they were mixed with.

563 or 45 percent were their mother, father, sister, brother, son, daughter or grandparent.

213 or 17 percent were a stranger.

59 or 4.7 percent were a stranger with the same name.

27 or 2.2 percent were a stranger with a similar name.

25 or 2 percent were a stranger with a similar Social Security number.

13 or 1 percent were an in-law.

Since there are approximately 200 million consumers with credit reports, even a small percentage of error represents a large number.  One percent represents 2 million consumers.  Errors on your credit report can take years to correct.  The credit reporting agencies are required by law to respond to your request for investigation within 30-45 days. Their research usually consists of verifying this information with the source of the data.

To check your credit reports for accuracy, you are entitled to a free copy of your credit report every 12 months from each of the three credit reporting agencies – Equifax, Experian and TransUnion.  Go to AnnualCreditReport.com or call 1-877-322-8228. Dispute any errors you find.

Credit Expert Witness, John Ulzheimer, is the President of Consumer Education at SmartCredit.com, the credit blogger for Mint.com, and a Contributor for the National Foundation for Credit Counseling.  He is an expert on credit reporting, credit scoring and identity theft. Formerly of FICO, Equifax and Credit.com, John is the only recognized credit expert who actually comes from the credit industry.  Follow him on Twitter here.