Consumer Reports advises consumers to closely check their credit reports for errors as the number of complaints about errors has skyrocketed in the past year.
Credit report complaints accounted for more than 50 percent of all consumer complaints to the Consumer Financial Protection Bureau (CFPB) in 2020. Inaccurate information on credit reports was the main complaint, according to the CFPB.
In response, CR is partnering with a group of consumer organizations to launch the Credit Checkup project to help consumers review their credit reports and provide advice on what to look for and how to correct errors if they find them. Consumers can register for the project via cr.org/creditcheckup
“Credit report errors are all too common and can cause serious permanent damage to your financial security,” said Syed Ejaz, policy analyst at Consumer Reports. “A mistake in your credit report can mean the difference between getting a high or low interest rate on a loan or even preventing you from being hired for a job or getting an apartment. Credit report errors have long been a problem, but they are especially harmful now. for those struggling financially during the pandemic. “
Consumers applying to participate in the credit check will play a key role in a people-driven research project by completing a short survey to report on their experiences. Consumer Reports analyzes that data and uses it to hold the credit bureaus responsible for keeping credit reports accurate. To publicize the credit check, CR partners with Americans for Financial Reform, Consumer Action, National Association of Consumer Advocates, National Consumer Law Center, and USPIRG.
Common mistakes in credit reports include bills or loans that have been paid off but are shown as unpaid, individual loans that are listed multiple times, and debts that are incorrectly reported in collections. Even a wrong address or date of birth on a credit report can get consumers in trouble. Other errors can be particularly serious, such as “mixed files” – when someone else’s information with a similar name or Social Security number appears in the wrong report or when fraudulent accounts are listed in a report as a result of identity theft.
A new problem has arisen because some companies incorrectly report postponements during the pandemic. The CARES Act, the law passed by Congress last March to provide assistance to those who lost their jobs or income when the economy stalled, requires companies that provide government-backed mortgages and student loans to make deferred payments to borrowers. to offer. Other financial companies have offered voluntary reprieve. The CARES law requires companies to report deferred payments as current to the credit bureaus if the borrower was current prior to the deferral. Unfortunately, some companies, including Navient, one of the largest student loan providers, have at times falsely reported these deferred payments as late.
The financial ramifications of credit reporting errors can be far-reaching, especially for those already grappling with the economic downturn triggered by the COVID-19 crisis. Errors in a credit report can hurt your credit score and prevent you from getting a loan or credit card or causing high interest to borrow money. Damaged credit scores can also affect whether you are hired for a job or rent an apartment. Cell phone companies and cable operators assess credit scores and may require a larger down payment to sign up for service if your score is not high enough.
Consumers have the legal right to request a free credit report once a year from any of the three major credit bureaus at yearcreditreport.comIn addition, these agencies offer weekly online reports for free until April. If you find errors in your credit reports, CR recommends taking the following tips:
* Prepare dispute materials for each agency: The three major credit bureaus – Experian, Equifax, and TransUnion – don’t communicate with each other, so it’s smart to get in touch with each agency. Filing a dispute with any credit bureau, rather than the lender or bank, provides protection for how quickly it needs to be handled. It also provides a legal avenue to sue the credit bureaus and creditors or collectors if necessary.
* Collect evidence: If you are filing a dispute about a debt that has been incorrectly reported, please include account statements or payment details. Credit bureaus can dismiss claims without sufficient backup information as “frivolous.” And resubmitted claims can be denied if they are considered similar to previous claims.
* Make a paper trail: Write a letter explaining the problem. Avoid using standardized online forms from the credit bureaus, which can oversimplify your dispute by requiring you to choose from predefined check boxes. In addition, by filing your dispute online, you could unwittingly waive your right to sue as an individual or in class action.
* Send all materials by certified mail: keep copies for yourself. This makes it easier to confirm that the credit bureaus are following legal timelines. Credit bureaus have five days to deliver the disputed information to the financial institution or collection agency that provided the information. If that company does not investigate and respond to the dispute in time, the credit bureaus are legally obliged to delete the information.
* If you lose your dispute, consider working with an experienced attorney: you can sue a credit bureau or financial institution for errors in the credit report. Look up an attorney through the National Association of Consumer Advocates consumeradvocates.org