In light of recent discussions and misinformation reported in the news media regarding credit report inaccuracies and the difficulty in correcting them, we would like to provide our perspective and highlight some important facts.
Credit reporting agencies have a very simple but challenging goal with regard to accuracy of consumer credit files: we want perfection. It is important that our data is accurate, so that lenders can make a more accurate assessment of consumer risk.
The Consumer Financial Protection Bureau (CFPB) looked at the issue of credit accuracy last December and reported that between 1.3% and 3.9% of consumers disputed information in their credit report. Another recent study by the Policy and Economic Research Council (PERC) concluded that only 0.5 percent found an error that would cause the consumer to move to a higher risk category and possibly pay a higher interest rate. Even the recently released Federal Trade Commission study – which used “coaches” to help consumers find errors — said that only 2.2 percent of reports had an error which potentially could have a meaningful impact on the consumer’s score.
Studies show that when there is an error and consumers use the dispute process, they are satisfied with the outcome 95 percent of the time. We resolve three out of four disputes within 14 days – less than half the time required by law. And we’re instituting a new process that will reduce the dispute processing time dramatically – in some instances by up to 50 percent.
Incorrect data makes its way into our database for many reasons. When a consumer disputes a report, the first thing we do is to ask whoever furnished the data in the first place to verify it. In 2012, data furnishers responded to our verification requests in 8.5 days on average. (Legally they have 30 days to respond.) To speed this up even more, we’re upgrading our processing system to let us transmit the disputed consumer document images to the data furnishers rather than the current method of forwarding the dispute request, which triggers a process with the data furnisher to look up the necessary documents.
Over the past year, about 60 percent of these reinvestigated disputes were closed when the data furnisher verified the information in question was accurate. In 40 percent of the cases, Equifax modified or deleted data in a consumer’s credit file. In 36 percent data was modified or deleted as a result of the reinvestigation. The remaining four percent of modifications or deletions were a result of the data furnishers failing to respond in the legally mandated response window.
Our goal is perfection – we want to ensure that every consumer’s credit file is accurate. For that to happen, all parties – data furnishers, consumers, government agencies and the CRAs – have a responsibility and need to work together.
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