One out of five consumers had errors on at least one of their three major credit reports, according to a study of the U.S. credit reporting industry conducted by the Federal Trade Commission (FTC).
The FTC noted that the errors identified in the study could result in the consumers paying more for products such as auto loans and insurance, and warned consumer to check their credit reports regularly.
"These are eye-opening numbers for American consumers," said Howard Shelanski, Director of the FTC's Bureau of Economics in a press release. "The results of this first-of-its-kind study make it clear that consumers should check their credit reports regularly. If they don't, they are potentially putting their pocketbooks at risk."
The Fair Credit Reporting Act (FCRA) requires each of the nationwide consumer reporting companies -- Equifax, Experian, and TransUnion -- to provide consumers with a free copy of their credit report, at their request, once every 12 months.
As part of the FTC study, required by the Fair and Accurate Credit Transactions Act of 2003, participants were urged to use the procedures in the FCRA to resolve any errors found in their credit reports. The results were fairly encouraging:
- One in five consumers had an error corrected after disputing it with the Credit Reporting Companies (CRAs);
- Four out of five consumers who filed disputes experienced some modification to their credit report;
- Just over 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 one in 250 consumers had a maximum score change of more than 100 points.
"Your credit report has information about your finances and your bill-paying history, so it's important to make sure it's accurate," said Charles Harwood, Acting Director of the FTC's Bureau of Consumer Protection. "The good news for consumers is that credit reports are free through annualcreditreport.com, and if you find an error, you can work with the credit reporting company to fix it."
Get Your Free Credit Reports: Free annual credit reports can be ordered from all three credit reporting companies at the same time by visiting annualcreditreport.com, calling 1-877-322-8228 , or by completing the Annual Credit Report Request Form and mailing it to: Annual Credit Report Request Service, P.O. Box 105281, Atlanta, GA 30348-5281.