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Check Your Credit Report For Accuracy Of Credit Record Information |
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Although participation by reporters in the
credit reporting process is voluntary, reporters are subject to rules and
regulations spelled out in the Fair Credit Reporting Act (FCRA). The FCRA regulates access to credit information and prescribes how the agencies are to maintain each credit report they hold. Under the FCRA, only verified persons can obtain a credit report; for example, to facilitate a credit transaction, to screen prospective employees, or to underwrite property and casualty insurance involving a consumer. The FCRA prohibits a reporter from furnishing any information to a credit-reporting agency if the reporter knows or consciously avoids knowing that the information is inaccurate. The act also requires reporters to help correct errors that consumers have identified. The FCRA also prescribes the responsibilities of the reporters and the agencies when a consumer challenges the accuracy of information in a credit record. Within 30 days after a dispute is filed, a credit-reporting agency must remove or correct inaccurate, incomplete, or unverified information in a consumer's credit record. In addition, anyone using information in a credit report to take adverse action against a consumer (e.g., denying a request for credit) must notify the consumer that the credit report has been used in the decision. Such consumers are entitled to free copies of their credit reports. Credit reporting agencies use various techniques and editing procedures to process the information they receive and to assess its accuracy, completeness, timeliness and consistency. If they discover or suspect that the data contains errors, they return the data to the reporter for resubmission with any necessary corrections. Otherwise, the agencies compile and process the newly received data to create or update the record of an individual's credit experiences. This processing can sometimes be difficult and has the potential for error. For example, the agencies have had to devise techniques for recognizing that sometimes data items reported with the same identifying information, such as the same name, may actually be associated with different individuals. Similarly, a social security number may be missing from or may be reported incorrectly in credit report on an individual. In such cases, the likelihood of associating the reported item with the wrong person increases significantly. Credit reporting agencies' data is incomplete in two respects. First, not all information on credit accounts held by individuals is reported to the agencies. Some small retailers, mortgage and finance companies do not report to the agencies, and individuals, employers, insurance companies, and foreign entities typically do not report loans they extend. Also, information on student loans is not always reported in the credit reports. Second, some accounts that are reported contain incomplete or out-of-date information. Sometimes creditors do not report or update information on the credit accounts of consumers who consistently make their required payments as scheduled or on the accounts of those who have been seriously delinquent in their payments, particularly accounts with no change in status. Similarly, credit limits established on revolving accounts, such as credit cards, are not always reported or updated in the credit report. Moreover, creditors may not notify agencies when an account is closed, transferred, or assigned a new payment status. Each of these possibilities contributes to problems of data completeness and integrity, and each has the potential to compromise the evaluation of an individual's creditworthiness. Another problem that may compromise credit evaluations concerns the timeliness of the data. The information reported on credit accounts reflects each account's payment status and outstanding balance as of a date shortly before the information is forwarded to the agencies. Thus, the information is sensitive to the date on which the information is forwarded. For example, a credit account reported the day after a creditor has posted a payment to the account would show a smaller balance than will the same account reported the day before the posting in your credit report. Besides the accuracy, completeness, and timeliness of information in a given credit record; the consistency of information about an individual's credit report across agencies is an issue of concern. |
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