The Federal Trade Commission (FTC (News - Alert)), which works to prevent business practices that are anticompetitive, deceptive or unfair to consumers, recently conducted a study about the U.S. credit reporting industry, and reported a startling truth that 5 percent of consumers had errors on one of their three major credit reports which could lead to less favorable terms for loans.
Errors in credit reports also meant consumers could end up paying more for products such as auto loans and insurance.
Howard Shelanski, director of the FTC’s Bureau of Economics commented, “These are eye-opening numbers for American consumers. 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 FTC is reportedly the only federal agency with both consumer protection and competition jurisdiction in broad sectors of the economy. The organization reportedly pursues vigorous and effective law enforcement, advancing consumer interests by sharing its expertise with other legislatures and agencies.
This newly conducted study is the first to analyze all primary groups that participate in the credit reporting and scoring process: consumers; lenders/data furnishers (which include creditors, lenders, debt collection agencies, and the court system); the Fair Isaac Corporation, which develops FICO credit scores; and national credit reporting agencies (CRA).
The study also found that out of every five consumers’ disputes to credit reporting agency (CRA), four were subjected to modifications in the credit reports, and slightly more than 10 percent of consumers realized a change in credit score after receiving CRA modifications.
Charles Harwood, acting director of the FTC’s Bureau of Consumer Protection, added, “Your credit report has information about your finances and your bill-paying history, so it’s important to make sure it’s accurate. 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.”
Edited by Braden Becker