Consumers might face significant problems with credit reports

Financial experts regularly recommend that consumers take the time to order their credit reports as often as possible, and now a new report shows exactly how much trouble not doing so can cause for those seeking new lines of credit.

When it comes to credit reports, mixups may not be as uncommon as previously believed, according to a report from the Columbus Dispatch. The report mentioned that some recent studies have suggested that as much as 80 percent of all credit reports contain at least one error, though these are not necessarily always damaging. Some mistakes, the report continued, are the result of a credit issuer misreporting another person's credit — typically by transposing numbers in a Social Security number or making typographical errors in entering data — that can lead to what are known as "mixed files" containing information for more than one person.

In all, 6 percent of consumers who complained to the Federal Trade Commission in the 30 months following the beginning of 2009, and 8 percent of those who complained to state attorneys general, stated that their credit reports had been mixed with another person's, the report said. Often, these issues arose because consumers' credit information was merged with family members, including in-laws, and even neighbors, as well as strangers with the same name, similar names, similar Social Security numbers, and even no similarities whatsoever.

More problematically, 30 percent of those who made these complaints to the FTC said that the credit reporting agencies that issued the erroneous credit report did not correct the mistake, the report said. This may be due to a 2004 FTC ruling that allowed the three credit bureaus to use less stringent criteria — such as less than all nine digits of a consumer's Social Security number — to match borrowers to their lines of credit on their credit reports.

Lingering problems even when a consumers' report seems right

Another issue many Americans face is that when requesting copies of their credit reports, they can only do so by using their exact names, Social Security Numbers, dates of birth, and addresses, however creditors don't have to be nearly as careful when requesting such credit reports, the report said. For that reason, the credit reports that creditors see may be at variance with what the affected consumers see, containing inaccurate information that can essentially remain invisible to those consumers. In other words, even if a consumer has sorted out problems on the report they reviewed, which in itself can take as much as a year or more to clear up, other problems may still linger.

A mixed credit report can be problematic for consumers who are seeking new lines of credit. For instance, a person applying for a car loan might find out that they have been inaccurately saddled with a delinquent mortgage debt that should be another person's problem. For this reason, it's important for borrowers trying to improve their credit scores to be able to provide proof they're not responsible for questionable items claimed within those credit reports.

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