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10 Mar 2013

Credit Report Errors: 40 Million Americans Hurt by Mistakes

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Tristan Powys (Credit Counselor) @ LUCID Clear Credit

Is your Credit Report accurate? CBS reports that the Federal Trade Commission (FTC) (SIMILAR TO THE NATIONAL CREDIT REGULATOR IN SA) says one out of five Americans has an error on their credit report.“And one out of 10 has an error on their credit report that might lower their credit score,” says Jon Leibowitz, chairman of the FTC.

We live in an age where our credit reports highly influence our large purchasing decisions. Unexpected errors in these credit reports can prevent us from buying a house, a car, or even starting up a business.

“I’m trying to think of another industry where a 20 percent error rate would be acceptable. That’s a pretty high error rate,” says Steve Kroft, correspondent of CBS’s 60 Minutes.

A new government study indicates as many as 40 million Americans have a mistake on their credit report. Twenty million have significant mistakes.

According to Adv Kate Thambiran, MD of LUCID Clear Credit, “the situation is South Africa is more concerning. In the latest figures from the National Credit Regulator – more than 60% of the disputes lodged (challenging incorrect information) with the credit bureau are resolved in favor of the consumer.” In comparison to the US statistics, ours suggest that three out of five South Africans may have an error on their credit report.

Kroft claims the credit reporting industry also shows that those mistakes can be nearly impossible to get removed from a person’s credit record. There are many cases where credit report companies provide inaccurate information, ranging anywhere from one’s credit history to even one’s name and social security number.

But why are credit reports so hard to fix?

According to TIME Business and Money, Attorney Chi Chi Wu of the National Consumer Law Center says that “credit bureaus don’t want to spend money investigating disputes, because there’s no profit for them. That’s why they’ve automated the heck out of the dispute system.”

The error rate of credit reports will remain high, as long as these bureaus lack an incentive to clear these errors.
Wu’s advice to consumers: “If you do have an error, get an attorney. That’s the only time the credit bureaus take your seriously.”

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