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Your Money: FTC finds significant errors on consumer credit reports
Consumers have always been encouraged to check their credit reports, but it's more important than ever with news that up to 26 percent of people covered by the US credit reporting industry had possible errors on one of their reports.
Here's a look at some area resources, including one that recently closed.
California Rural Legal Assistance: In addition to regular services, the nonprofit group's Marysville office offers free and open workshops monthly on debt and debt collection. Advice includes credit report information. Find the monthly calendar at crla.org, call 742-5191 or visit the office at 511 D St., Marysville.
Consumer Credit Counseling Service: The nonprofit was a member agency of the National Foundation for Credit Counseling before stopping services in December, NFCC spokeswoman Gail Cunningham said. It was established in 1967 and served Yuba, Sutter and Colusa counties. The Bridge Street office in Yuba City provided debt counseling and credit reviews.
ClearPoint Credit Counseling Service: The Sacramento office is the closest NFCC agency to Yuba-Sutter with the closing of Consumer Credit Counseling Service. Staff provide free and low-cost services in areas like credit counseling and debt management. Call 916-925-7093 or visit 1750 Howe Ave., Suite 125, Sacramento.
AnnualCreditReport.com: Residents can check their credit report for free once a year from one of three companies — Equifax, Experian and TransUnion — in accordance with the Fair and Accurate Credit Transactions Act. Reports can be requested online, by calling 1-877-322-8228 or requesting a form via mail. The free reports don't include a credit score but offer a chance to review and monitor for errors or identity theft.
About 1 in 20 consumers has significant errors on their credit report that could cause them to pay more for auto loans and other financial products, according to a Federal Trade Commission report released Feb. 11.
The study also found that about 26 percent of the approximately 200 million people covered by the US credit reporting industry had at least one "potentially material error" on one of their three credit reports.
And 4 out of 5 people who took steps to fix errors with one of the three major credit reporting companies — Experian Information Solutions Inc., Equifax Inc. and TransUnion — got their credit report changed.
The findings show that consumers need to closely monitor their credit reports, the agency said.
"These are eye-opening numbers for American consumers," said Howard Shelanski, director of the agency's economics bureau. "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."
Agency officials noted that federal law allows consumers to get a free credit report once every year from the three major firms. The website to obtain the reports is annualcreditreport.com.
"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 agency's consumer protection bureau.
This study was the first time the agency has taken a comprehensive look at all aspects of the credit-reporting process, including consumers, lenders and large credit reporting companies. It studied 1,001 randomly selected consumers and their credit reports and helped them identify potential errors.
While the 26 percent error rate was high, not all of the errors resulted in changes in credit scores that would cost consumers money, the study said. Of the 2,968 credit reports studied — about three for each consumer — about 2.2 percent had errors that were likely to change their credit score enough to cause them to pay higher rates for loans and other products.
The Consumer Data Industry Assn., a trade group representing credit reporting companies, cited that 2.2 percent figure in touting the accuracy of credit reports.
"Confirmation that credit reports are accurate is a good thing, but all consumers should be aware that checking credit reports every year is fundamental to accuracy," said Stuart Pratt, the group's president.
The Consumer Financial Protection Bureau, which shares oversight of the industry with the Federal Trade Commission, reported in December that less than 1 in 5 consumers obtains copies of their credit report each year.