For those seeking a loan, credit scores are the number one factor that affect cost of credit and loan eligibility. For this reason, ensuring that your credit report accurately reflects your payment history is a top priority. In a 2012 study by the Federal Trade Commission at least one in five people found an error on their credit reports. At least 20% of those who identified and corrected the error experienced an increase in their credit score, which increased the likelihood of being offered a lower interest rate on a loan.
Many people struggle with the often intimidating process of disputing inaccurate information that is disclosed on their credit report. The Federal Trade Commission has issued a follow-up study of credit report accuracy that recommends that credit reporting agencies improve the process they use to notify consumers about the results of dispute investigations, and that they better educate consumers regarding their rights to review and dispute inaccurate information.
In response to the study findings, the three nationwide credit bureaus – Equifax, Experian and TransUnion – announced today a National Consumer Assistance Plan that will provide you with more transparency and a better interactive experience when disputing incorrect data. The credit reporting agencies have collaborated in an unprecedented manner to share industry best practices and develop a meaningful plan to improve consumer interaction and enhance data accuracy and quality. Here are a few highlights from the National Consumer Assistance Plan:
• Consumers visiting www.annualcreditreport.com, will receive a free credit report once a year and will see expanded educational material.
• Consumers who dispute information and resolve errors will be able to obtain another free annual report without waiting a year.
• Consumers who dispute items will receive the results and a description of what they can do if they are not satisfied with the outcome.
• Enhanced dispute resolution processes are available for consumers that are proven victims of identity theft and fraud, as well as those involved in mixed file situations.
Data accuracy and quality:
• Medical debts won’t be reported until after a 180-day “waiting period” to allow insurance payments to be applied. The agencies have agreed to remove from credit reports previously reported medical collections that have been or are being paid by insurance.
• Data furnishers will be prohibited from reporting authorized users without a date of birth and the agencies will reject data that does not comply with this requirement.
• The agencies will eliminate the reporting of debts that did not arise from a contract or agreement by the consumer to pay, such as tickets or fines.
• A multi-company working group will be formed to regularly review and ensure uniformity in the data submitted in a consumer’s credit report.
The FTC has a wide range of general information for consumers on credit reporting issues, including Free Credit Reports, Disputing Errors on Credit Reports, and It Pays to Check Your Credit Report. It also has information available on how credit scores affect the price of credit and insurance and what consumers need to know about their credit reports when looking for a job.