WASHINGTON — A recent Federal Trade Commission (FTC) study found that errors in credit reports can cause consumers to be denied credit or other benefits or pay a higher price for them, according to the FTC’s testimony before a U.S. Senate Commerce subcommittee.
The study also found that such errors may lead credit issuers to make inaccurate decisions such as denying credit to potentially valuable customers or issue credit to risky customers. “The commission recognizes the importance of accurate and complete credit reports, both to businesses that use them to make decisions and to the consumers who are affected by those decisions,” said Maneesha Mithal, Associate Director, Division of Privacy and Identity Protection, on behalf of the agency.
Participants in the FTC study who identified a potentially material error on their report were encouraged to dispute the erroneous information. Twenty-six percent of consumers reported a potential material error on one or more of their three reports and filed a dispute with at least one credit reporting agency (CRA) and half of these consumers experienced a change in their credit score.
For five percent of consumers, the error on their credit report could lead to them paying more for products such as auto loans and insurance.