Data collected about us rules our lives. Our driving records, search engine history, online purchases and credit history are bought and sold every day. And, decisions about where we live and where we work are often made based on the information in our credit reports. But, a new report from 60 Minutes indicates that the information about our credit can have significant problems. According to their research, 40 million Americans have errors on their credit reports.

What Kinds of Errors Show Up on Reports?

One in every four consumers has some sort of error in their credit reports. Around five percent of consumers have an error that can reduce their credit scores.

Common serious errors include:

  • Paid accounts appearing as delinquent.
  • Closed accounts showing as open.
  • Bad debts that belong to other people who have similar names or Social Security numbers.

When errors like these show up, they can mean paying a higher percentage rate on your mortgage, auto loan or credit card, being denied a loan or failing to get a job that you are qualified for. If these serious errors exist in your report, the lost opportunities can cost you tens of thousands of dollars over a period of years.

What Happens When You File a Dispute?

When you find an error in your credit report, the current remedy is to file a dispute. And, every year, eight million people file disputes about their credit reports. Usually, you have to do this by either mailing a letter, calling a toll free number or visiting the credit reporting agency’s account. The websites are geared more toward selling products and are not always efficient for disputing reports. When you make a call, you are often connected to a person on another continent who does not have the authority to make the needed changes on your account.

If you dispute an error by mail, your request will often go to an office in India, Chile or the Philippines. Investigative reporters with 60 Minutes interviewed dispute agents who had worked for Experian. The agents said that the processed around 90 disputes per day and that they had few options for investigating disputes. They did not have the power to contact the people involved via email or phone. They could only study the documentation that they had and give it a two digit code for complaints such as “not mine” or “never late.” Those were then sent with a brief summary back to the department store, bank or other creditor who originated the information. In general, these disputes were settled in favor of the creditor.

A number of legal credit experts say that they find these practices lack transparency and may not be in compliance with federal law.

Saving Your Credit from Errors

The first step you can take is checking your credit report regularly. You are entitled to a free report from each of the three major reporting agencies once every 12 months. You should also request your report immediately if you are denied credit. Often, resolving the error can be difficult on your own. If you are having problems, contact us to learn more about how we can put our expertise to work updating and correcting your report to get you the credit you have due.

Credit Bureaus – Why are there 3 ?

One of the things that people new to credit repair and financial literacy often wonder is why there are three different credit reporting agencies. If it’s an official agency, wouldn’t one do the job? The answers have a lot to do with how the agencies are structured and their actual roles in individuals’ credit scoring.

1. They’re for-profit companies.

It’s common for people to believe that the credit reporting agencies are federal government agencies. But, Experian, TransUnion and Equifax are all businesses. So, asking why there are three different credit reporting agencies is kind of like asking why they make Pepsi and Coke.

While these are private companies, they are governed by laws that dictate how they can use your information. For instance, they must send you your report when it is used to deny you a loan. They also must be responsive when you are trying to get an erroneous debt removed.

2. They’re in competition.

These three companies are in competition for one another. They make their money by selling reorts to lenders that can help determine how risky it is to do business with a potential borrower. If you compare your credit reports from the three agencies, you will often find that the information on them is not identical. Often, one will miss a debt that is shown on another, or there will be a small difference in how they report an account.

Because the three bureaus are in competition, they don’t generally share information with one another. While you work to repair your credit, it is important to request your reports from all three bureaus. If you find errors, make sure to request corrections directly from all three reporting agencies.

3. There doesn’t need to be just three.

At the current time, there are three major credit bureaus. But, there are also other credit bureaus that you may run into in other situations. ChexSystems keeps track of people’s history with bank accounts. If you’ve bounced checks or overdrawn accounts in the past, their reports can keep you from getting new accounts. There are also credit reporting agencies that deal with specific types of debt, such as rent-to-own furniture or other sub-prime loans.

Over time, we will see more companies offering credit reporting services. Plus, the three credit reporting agencies are starting to add more services for both consumers and lenders. TransUnion is now offering a credit score that is similar to your FICO credit score. While this score may not be used by many lenders, it can give consumers a ballpark idea of their credit scores and help them determine whether they will qualify for credit cards, car loans or mortgages. By keeping up to date on what credit reporting agencies are out there and being used by banks, you can empower yourself to protect your financial future.

Credit Reporting And Resolution About to ChangeMany people have experienced hassles when trying to fix errors on their credit report. These errors can significantly impact your credit score and make it harder and more expensive for you to buy a home, open a new line of credit or even to get certain jobs and insurance policies. But, in the wake of a multi-state investigation, the three major credit reporting agencies have agreed to improve the way they handle credit report error sand disputes and reporting of medical debt.

The Investigation

TransUnion, Experian and Equifax were the subject of an investigation that started in 2012 and spanned 31 states. Investigators looked into the way that they handled report resolution and consumer disputes, the accuracy of the reports that they issued and the way that they marketed paid-for services like credit monitoring to people who contacted them to dispute their reports. The investigation culminated in an agreement earlier this year that will change the way that they handle errors and medical debt and also require them to be more proactive when resolving disputes over information on credit reports.

Changes in Report Resolution Process

The changes will go into effect nationally over the next six to 39 months. Among the changes that consumers can expect:

  • Reviews from trained employees. When people submit documentation that there is an error in a report, employees at the reporting agencies will now be required to investigate and resolve disputes.
  • Different handling of medical debt. About 43 million Americans have past-due medical debt on their credit reports. Under the new rules, medical debt will not be reported until after a 180 day waiting period. This gives insurers time to apply payments and consumers time to deal with debt that their health plans don’t cover. In addition, medical collections that have been, or are being paid by the insurance, will be removed from the credit report.
  • A database of bad data furnishers. A list of creditors that have made erroneous or false reports will be maintained by all three agencies. They will be required to give this information to states upon request.
  • No marketing during phone calls. When a consumer calls to dispute an entry on a credit report, the agencies will not be allowed to market services like credit monitoring until after the dispute part of the call has ended. Additionally, they will be required to tell customers that they are not required to buy a product to dispute a report.
  • A better, more detailed system. Under the new system, it will be easier to share data.
  • A clearer escalation process. When someone is dealing with a complex problem such as identity theft, fraud or mixed up files, there will be a process to escalate the issue and handle the resolution.
  • Information about mixed files. When one person’s information winds up on another person’s report, the agency that discovers it must inform the other two.
  • Shared documents. When someone disputes an entry on their report, the agencies will now have to provide the documents to the creditor that initially filed the entry.
  • More credit reports. Now, if someone disputes an entry and a change is made, they can get another free report.

Between these changes, it is hope that people will have an easier time with credit repair and will be more empowered to handle financial and credit issues. By making it easier for people to control what goes on their credit reports, officials hope to make it easier for people to get financial opportunities and increase their financial success.