The Federal Trade Commission just released a report that found 25 percent of people had at least one error that could negatively impact their credit score.
This report was a decade-long study of the credit reporting industry, and found that once errors were disputed one in ten consumers saw their FICO scores increase.
The FTC estimates that between 10 and 21 percent of consumers have inaccurate credit reports, which means that between 20 million and 42 million people have reports that make them look riskier to lenders. Seemingly small errors can have an effect on consumers.
Finding the error can be easy. However, it is getting the credit agency to fix the problem that can be tricky. The credit reporting industry is dominated by three companies: Equifax, Transunion and Experian. The agencies keep files on about 200 million Americans, and are currently under investigation for violating the Fair Credit Reporting Act.
Judith Thomas filed a federal lawsuit against Equifax and Transunion after trying for over 10 years to fix an error on her credit report. Because of the error, she could not refinance her home, co-sign on her children's college loans or buy a car. After a year-long battle, she settled with the reporting agencies for an undisclosed amount.
The most common errors included information furnished by credit lenders and debt collectors. About 8 million credit report disputes are filed every year, according to the FTC.
The report is a reminder that consumers should check their credit reports once a year. You can check your credit rating at annualcreditreport.com.
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Source: Business Insider, "42 Million Have Credit Report Errors," Feb. 11, 2013.