Jun 10, 2013 Quinn Thomas
Federal regulations regarding the use and creation of consumer credit reports may be altered after the Federal Trade Commission (FTC) found that many reports contain errors. An eight year study recently concluded by the FTC found that nearly one in five Americans have a mistake on their credit reports, accounting for about 40 million people throughout the nation. More worrying for U.S. consumers and lenders is that roughly 10 percent of citizens have an error on one of their reports, which affects their credit score.
There are three major credit bureaus that establish scores for U.S. consumers, and each entity's score can be different. The FTC report noted that these credit firms can sometimes make mistakes despite normally conducting proper investigations regarding consumer credit data. So even if two reports are accurate, a third containing an error may harm a consumer's score.
Despite the negative press, industry experts said that catching these mistakes may be a good sign, as it shows the credit bureaus are indeed being regulated.
"We feel our industry is reaping better results at this time because the bureaus are being audited for work that was not done correctly or not done at all," said Ricardo Mendiola, president of MSI Credit Solutions, a consumer credit consulting firm. "We are seeing an increase in information being corrected or removed due to inaccuracies that were previously reporting on our clients' reports."
Reform may come in New York
Although the industry is increasing measures to establish secure credit reporting habits, some cities and states are acting on the news that credit data may be inaccurate by outlawing some common credit analysis practices.
A new bill that is currently being considered by New York City's Committee on Civil Rights may limit the cases in which companies looking to fill jobs can access applicants' credit reports, the New York Times reports.
The source cited that case of a military veteran that was unable to get a job with the Transportation Security Administration due to an erroneous credit report. By the time he addressed the issue, the position had been filled.
If passed, there would be few instances in which an employer in the city could access an worker's credit data. The only cases that would be exempt from the pending legislation would be jobs in which state and federal laws already require credit checks to be conducted as part of an employment background screening.