Opinion: We Take Credit Report Accuracy Seriously

(Aug. 18) -- As the economy continues to struggle, consumers are keeping a close watch on their personal financial matters. So it seems a good time to remind consumers that federal law currently provides many rights and protections for consumers that allow them to review and correct information in their credit report. Here are a few suggestions for consumers.

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In managing their personal financial matters, consumers should periodically review the information contained in their credit reports. They are entitled to a free annual credit report from each of the three nationwide consumer-reporting agencies, which can be accessed electronically by going to www.annualcreditreport.com.

When examining their credit reports, consumers should verify that the information in their credit report is accurate. Credit bureaus take the issue of accuracy seriously, and it shows in the low percentage of credit reports where there are errors. However, consumers have the right to dispute data if they believe it is inaccurate. For more information on the dispute process, go to www.ftc.gov/credit.

In those instances where a consumer does dispute information, a credit bureau must respond within 30 days. Currently, over 70 percent of all inquiries are handled in 14 days or less. And almost all these inquiries are handled to the satisfaction of consumers. The Federal Trade Commission notes that in only 5 percent of the cases where a dispute was filed with a credit reporting agency did the consumer contact the agency to dispute the information a second time. So not only are credit bureaus extremely responsive when it comes to consumer inquiries, but the vast majority of consumers are satisfied as well.

In terms of accuracy, the record of the credit bureaus is very strong. For instance, over a two-year period, 52 million credit reports were provided to consumers through the above-mentioned website, and less than 2 percent of those reports resulted in a consumer dispute in which data were deleted because of errors. Allstate Insurance Co. had a similar experience when it reviewed more than 17 million credit reports; it found that in less than 1 percent of the cases a consumer filed a dispute over the information in the report.

Credit reports can be used for not only granting credit but for employment purposes as well. However, the consumer must provide written permission. Also, the employer must provide the consumer with a copy of the credit report before making an adverse hiring decision. One of the enduring myths that continue to circulate is that credit scores are used for employment purposes. That's simply not true. Credit scores are neither developed nor sold for employment situations.

At a time when many consumers are experiencing financial difficulties, it's important that they actively engage in monitoring and reviewing their personal financial matters. The consumer-reporting industry will continue to provide lenders with accurate data that allows them to make sound underwriting decisions. The industry will also continue to respond in a timely manner to consumers whenever there is a question about information in the credit report.

Norm Magnuson is vice president of public affairs at the Consumer Data Industry Association, an international trade association that represents the consumer credit-reporting information industry.