Credit Report Problems are a Major Issue for Consumers

A recent FTC study reveals that credit reports are a frequent source of headaches for consumers.

The Fair Credit Reporting Act provides consumer rights in regards in credit reports, but the sheer number of credit reporting issues is quite shocking.

Notably, items in collection, which are sometimes reported by debt collectors, appear to be a large source of consumer disputes.

One in five consumers had an error on their report

The FTC study provides a number of statistics about the consumer credit reports, but here are a few of the most disconcerting:

  • One in four consumers identified errors on their credit reports that might affect their credit scores;
  • One in five consumers had an error that was corrected by a credit reporting agency (CRA) after it was disputed, on at least one of their three credit reports;
  • Four out of five consumers who filed disputes experienced some modification to their credit report;
  • Slightly more than one in 10 consumers saw a change in their credit score after the CRAs modified errors on their credit report; and
  • Approximately one in 20 consumers had a maximum score change of more than 25 points and only one in 250 consumers had a maximum score change of more than 100 points.

Collection items had the highest rates of dispute

On average, approximately 40% of the disputes handled by the major credit bureaus were related to items considered to be in collections.

Notably, the FTC estimates that only 1.1% of the total trade lines reported are related to collection items. In other words, 1.1% of the information results in approximately 40% of the disputes. That sounds problematic.

How to dispute something on your credit report

If you think a debt collector is incorrectly reporting on your credit report, it’s a good idea to contact a consumer rights attorney.

Perhaps the most common reporting dispute is when a consumer disputes a debt after receiving a collection letter, but the debt collector continues to report a debt without listing it as “disputed.”

If you think there is an error on your credit report, take a look at this guide from the FTC. You can also use this handy credit report dispute letter if you want to try and tackle the issue.