Credit report errors can cause years of misfortune

.By now, everyone, or most everyone, knows that their financial lives are contained within information compiled by the three main credit bureaus - Experian, Trans Union and Equifax. That information, sold to lenders in the form of a credit report, tells lenders what they need to know before they decide whether or not to lend money or extend credit to a customer. What happens when that information isn’t correct?

A recent study shows that nearly 80% of credit reports have errors. While they often are negligible in substance, up to one quarter of all reports have errors that are serious enough to prevent someone from obtaining credit. By law, the bureaus are supposed to respond to a complaint about mistakes within 30 days, but in practice, it can take much longer than that. The problems that take the longest to repair are those where the lender insists that the information is correct, even if the customer can prove otherwise.  These cases often involve mistaken identities or identity theft, or just plain, old, garden variety typographical errors.

Most common errors are quickly fixed. They involve incorrect addresses, ages, phone numbers, and the like. Some others can take a long time, due to the complexity of the information involved. Here’s one example:

Mistaken identity - There have been cases of individuals who couldn’t obtain loans because the credit bureaus thought they were dead. That may seem like an easy thing to prove; after all, a phone call from the living should indicate otherwise, but that doesn’t seem to be the case. Most of the time, this is a case of mistaken identity, but if there’s a death certificate involved, it can take phone calls, attorneys and even lawsuits to straighten out. In the meantime, the would-be borrower is out of luck, as no one will lend money to someone who is dead. After all, the dead are unable to repay. This happens surprisingly often.

IWhile these problems are being sorted out, the borrower’s credit score is hurt, and he or she can’t get a loan, or a charge card, or possibly a job or a place to live. There doesn’t seem to be any Federal legislation on the horizon to help straighten this situation out, but it would be nice. It seems unlikely, though, as Congress is currently pretty happy with some of their recent financial legislation, such as the bizarrely named Bankruptcy Abuse and Consumer Protection Act. With increased reliance on computer generated financial information taking over our lives, the least the bureaus could do is help to make sure that information is accurate.

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