Recent information released by the Federal Trade Commission (FTC) affirms what anyone in the escrow, mortgage, real estate and finance industries will tell you…consumers always need to check their own credit profiles on a regular basis.
According to a recent study done by the FTC, 25 percent of American consumers have found errors on their credit reports. The FTC analyzed credit reports from the three major credit reporting agencies, Equifax, Experian, and TransUnion, and in doing so helped consumers identify potential errors in their credit profiles.
Information found in the Federal Trade Commission study also revealed that 5 percent of the consumers were able to identify errors in their profiles that may result in them paying more for mortgages, auto loans or other financial products, if they had not found and corrected the errors before applying for the assorted credit.
The FTC study also shows that 20 percent of the consumers had errors in their profiles that were corrected by the reporting agency after the consumer disputed the error, of these approximately 10 percent of the consumers saw improvements in their credit scores after the errors in the profiles had been corrected.
Results from the FTC study shows the importance of consumers checking their credit reports at least once per year (many analysts recommend twice).
But in fairness to the major credit reporting agencies, the Consumer Data Industry Association, which represents the credit reporting agencies and other data companies, stated that the proportion of credit profiles with errors was small and, “that credit reports are highly accurate, and play a critical role in facilitating access to fair and affordable consumer credit.”
Consumers are entitled to receive a free copy of their credit report from the three reporting agencies each year.
The new U.S. Consumer Financial Protection Bureau has been given the authority to both write and enforce new rules for the credit reporting industry, and has recently began monitoring of the credit agencies’ compliance. The CFPB is now accepting complaints from consumers who have discovered errors on their reports but are having difficulty in getting them corrected.
The agencies have 15 days to respond to any complaints, and must do so with a plan for correcting the errors; consumers can dispute that response.