Regulators need to step in as reporting system fails
It’s better for lenders, issuers than consumers
In some ways, the U.S. credit reporting system has improved. Credit freezes, which lock our credit information to deter identity theft, are now free and fast. We have free weekly access to our credit reports, courtesy of the credit bureaus Equifax, Experian and Transunion, until April 20, 2022. Free credit scores provided by banks, credit card issuers and other companies allow us to easily monitor for signs of fraud and other problems.
Unfortunately, our credit information still isn’t as accurate, easy to obtain or secure as it needs to be. These failures mean Congress and regulators need to step in.
Report errors abound
A 2012 study by the Federal Trade Commission found that 26 percent of consumers had an error on at least one of their credit reports, while 5 percent reported inaccuracies serious enough to potentially trigger higher interest rates or insurance premiums.
Nine years later, accuracy is still an issue. Earlier this year, Consumer Rep orts recruited nearly 6,000 volunteers to check their reports. The results: 34 percent found at least one error or account they didn’t recognize. (Unlike the longer-term FTC study, the Consumer Reports effort was not a representative sample of the population, says Syed Ejaz, a policy analyst and author of the Consumer Reports study.)
There simply aren’t enough incentives for credit bureaus to get things right. Their primary customers are financial institutions that can profit if someone who’s creditworthy gets charged a higher rate because of a mistake, said independent journalist Bob Sullivan, author of “Your Evil Twin: Behind the Identity Theft Epidemic.”
Because business interests dwarf consumers’ concerns, the government needs to step in. The FTC and the Consumer Financial Protection Bureau should establish stronger accuracy regulations and enforce the ones already on the books, Ejaz said.
Credit bureaus profit
Search for “free credit report,” “annual credit report” or even “Annualcreditreport.com.” The first results are likely to be ads for other sites that shill credit monitoring. The real site is often halfway down the page, with no indication that it’s the official, federally mandated place to get free credit reports.
People are understandably confused when they click on the other links and are asked for a credit card — often after they’ve input sensitive information, including their Social Security number and birth date. They’re even more dismayed when their supposedly free credit reports turn into a recurring subscription that could cost $20 to $40 a month.
The real site should be the first search result for keywords related to free credit reports. Also, any company buying ads for these keywords should be required to have a prominent button saying something like, “Looking for Annualcreditreport.com? Click here” with a link to the correct site.
The search engines, credit bureaus and other companies selling credit monitoring are unlikely to do this, so lawmakers need to act.
Let’s ditch the idea that access to our credit reports should be only once a year. It’s our data, typically collected without our permission and with no way to opt out.
If the credit bureaus won’t expand our access, Congress should.
“Let’s ditch the idea that access to our credit reports should be only once a year. It’s our data, typically collected without our permission and with no way to opt out.”