Have you looked at your credit reports lately? If you haven’t, you might be in for a surprise. Credit reports are notoriously prone to errors, but in the past few years the errors seem to be more ubiquitous and harder to fix. According to records from the Federal Trade Commission, the total number of consumer complaints regarding credit- report issues jumped more than fourfold between 2019 and 2023, from 165,000 to 711,802. Yet that figure represents just a fraction of the problems people had with their credit reports. Research from the Consumer Financial Protection Bureau indicates that the nationwide consumer credit-reporting companies — Equifax, Experian and TransUnion — receive millions of disputes annually regarding the completeness or accuracy of information on credit reports.
One reason is that there was a major uptick in identity theft from 2020 to 2022. This crime, which can leave a victim’s credit in shambles, is responsible for the majority of credit-report complaints that consumers file.
At the same time, the public gained substantially greater access to free credit reports. Until 2020, the three credit-reporting companies granted consumers only one free report per year, as they are required to do by law. But in response to the COVID-19 pandemic, the companies began providing free access once a week. The change has given consumers a chance to see and report credit damage much closer to real time.
Why is it so difficult to fix your credit reports?
According to the Fair Credit Reporting Act, credit-reporting companies must assure “maximum possible accuracy” in your reports. But if you ask the companies to fix an error, they might tell you to take up the issue with the furnisher — that is, the credit card company, lender or debt collector that provided the information in question.
That often makes sense, because furnishers are the ones responsible for providing information regarding credit card balances, monthly payments and other details about your debt. However, many times consumers report that a furnisher will simply refer them back to the credit-reporting company.
On top of that, credit-repair companies have muddied the waters for everyone. If you’re on TikTok, you may have seen influencers promoting these businesses; there are more than 40,000 in the U.S. Many credit-repair companies are one-person operations, and they’re operating in an industry filled with scammers. According to these companies, their main job is to help customers by disputing negative information on credit reports. However, their services are superfluous because you can dispute incorrect information yourself. In fact, most people can file a dispute in just a matter of minutes — for free.
Nonetheless, the growing credit-repair industry rakes in billions of dollars in annual revenue by promising to get accurate, negative information (say, a collection account for a debt the consumer truly owes) removed from credit reports and then inundating the credit-reporting companies with disputes and hoping something will stick.
What should you do about credit report errors?
You might be tempted to give up before you even look at your credit reports, but there are more reasons than ever to keep a watchful eye on them. If you’re not monitoring your reports, you might not discover damaging errors or identity theft until you have a mortgage application declined, you’re turned down for rental housing or you fail a background check for a new job.
Instead of waiting for a credit report error to interrupt your plans, try reviewing your reports on a regular basis — and far in advance of applying for a new apartment or credit, so you have extra time to clean up any mess you may find.
For free weekly copies of all three of your credit reports, visit the federally authorized website www.annualcreditreport.com. While other free services, such as Credit Karma and Credit-Wise, can be useful for accessing your credit scores, AnnualCreditReport.com is the only place where you’re guaranteed by law to see full copies of your reports from all three credit-reporting companies.
When you read your credit reports, look carefully for details that don’t belong. If you’ve experienced identity theft, you might find accounts that aren’t yours or “hard inquiries” for new accounts you didn’t apply for. Other material errors to note include an incorrect Social Security number, a wrong date of birth, someone else’s name appearing on your reports, or payments incorrectly reported as late. You should include all of those errors on a list of items to dispute. You might find other, legitimate negative records you would like removed from your credit reports, such as paid-off collection debt or a recent bankruptcy, but the dispute process is meant to rectify only inaccurate or incomplete information. To read more click here.
