The credit reporting industry and the degree to which errors on consumer files go unaddressed were given the full treatment by 60 Minutes on CBS tonight, with federal authorities interviewed stating that the industry is a “mess” and the impact on consumers is “unconscionable.”
The reliability of the industry to fix mistakes that can cause consumers to be denied mortgages, car loans, insurance and even employment is also the target of a just-released Federal Trade Commission study.
“Here’s what we found,” FTC Chairman Jon Leibowitz told 60 Minutes correspondent Steve Kroft. “Some pretty troubling information. One out of five Americans has an error on their credit report. And one out of 10 has an error on their credit report that might lower their credit score.”
The FTC study indicates that as many as 40 million Americans have a mistake on their credit report and 20 million have significant mistakes, Kroft reported.
“And our own investigation of the credit reporting industry shows that those mistakes can be nearly impossible to get removed from your record,” Kroft said.
Ohio Attorney General Mike DeWine has opened his own investigation into the credit reporting industry. Kroft said that for years the credit reporting agencies – Experian, TransUnion and Equifax – blamed mistakes on banks and merchants that provide them with bad information.
But DeWine told Kroft that the fault lies with the industry for what he described as clear violations of the Fair Credit Reporting Act.
“The federal law says that if you believe that there is a mistake, you can go to them and they have an obligation to do a reasonable investigation,” DeWine said. “They’re not doing a reasonable investigation. They’re not doing an investigation at all.”
Eight million people a year file disputes about their credit report which usually requires a visit to the Experian, TransUnion or Equifax websites.
But Kroft detailed personal horror stories that Americans have experienced trying to remove errors on their reports.
Sandra Cortez, a California accountant, was mistaken for an international drug trafficker on her credit report. It took her five years to get it fixed.
David Smith, a retired Army officer, had a bankruptcy listed on his report that wasn’t his. The mark triggered a foreclosure against his house in South Carolina. He is still dealing with the fallout, Kroft said.
“I think the industry’s a mess,” DeWine said. “And I think the impact it has on real people is just unconscionable.”
It took Judy Thomas a six-year battle with credit agencies, requiring box loads of correspondence, to try and prove that she was Judy Thomas, not Judith Kendall, as it was being reported to creditors, reported Kroft. The mistake went undetected by Thomas because it was not apparent in the credit reports she ordered from the three credit bureaus.
From 60 Minutes:
Judy Thomas: I couldn’t refinance. I couldn’t take advantage of the interest rates. I couldn’t get a new– I couldn’t get a car. I couldn’t cosign for my children’s student loans. And I’d worked hard for my credit. I was– and these people were taking it away from me.
Finally Judy Thomas took the only recourse available to her. She sued Equifax and TransUnion in federal court. And after a year-long battle, the credit reporting agencies settled for an undisclosed sum and promised to clean up her file.
The three credit bureaus declined to be interviewed by 60 Minutes. “We wanted to talk to Equifax, TransUnion and Experian,” Kroft said. “But like most consumers, we were unsuccessful.”
- Credit Report Errors: Consumer Disputes May Not Get Full, Fair Consideration
- Credit Histories: Only 1 in 5 Consumers Obtain Their Reports Annually