More Than a Quarter of People Find Serious Mistakes in Their Credit Reports, Study Shows
Consumer Reports and our partner WorkMoney had 4,300 people check their reports. Here’s what they found, and how to keep your credit safe.
Saving up to buy a house after her divorce, Tammy Chambers, 55, saw her dreams dashed last May when her credit score sank after numerous loans in her name were reported as delinquent. The big problem: The loans weren’t hers.
Chambers, who lives in Tacoma, Wash., contacted the loan company, Affirm, to tell them the account was fraudulent. She also filed a report with her local police and an identity theft report at the Federal Trade Commission. Then she submitted a dispute with one of the credit bureaus, Experian, asking for the delinquent debt to be removed from her report. In the dispute, she included documentation, including the police report.
But when Chambers reviewed her report earlier this year, the debt was still there. She was checking as part of Credit Checkup. The study, by Consumer Reports and the nonprofit WorkMoney, an organization that helps consumers lower bills and improve their finances, asked people to obtain and review their credit reports.
Chambers is far from the only American to face problems caused when inaccurate information finds its way into their credit report. The errors can be anything from fraudulent credit card accounts or loans to paid-off student debt reported as unpaid to seemingly minor mistakes such as accounts being listed in duplicate.
Information in your credit report is used to make all kinds of financial decisions about you, so errors can hurt your ability to get a loan or credit card, rent an apartment, or even get a job, says Ryan Reynolds, CR financial policy analyst and author of a new analysis, “Credit Checkup: Improving the Accuracy of Credit Reports.” “Errors on credit reports can even cause a person to have to pay more for car insurance,” Reynolds says, and can mean having to pay higher interest rates if you apply and are accepted for a credit card or loan.
More than 4,300 people volunteered to help CR and Work Money check their credit reports. Only about 3,200 of them reported being able to access their reports. Though the study is not nationally representative, it found that errors are common—44 percent of those participants discovered problems with the financial or personal information in their report, or both. Slightly more than a quarter of those errors (27 percent) were serious enough to potentially affect their creditworthiness.
The study’s results are in line with data about credit reports from the Consumer Financial Protection Bureau, which says that incorrect information on the reports is the No. 1 consumer complaint it receives. And the number of those complaints more than doubled between 2021 and 2023, from 165,129 to 430,600, according to CFPB data.
The consumer reporting industry shares the same goal as consumers, advocates, and regulators when it comes to credit reports: “They should be accurate and complete,” says Jackie Gulley, vice president of communications for the Consumer Data Industry Association, the trade association that represents the big three credit bureaus, Equifax, Experian, and TransUnion. She adds that their business model depends on accuracy, so “when the information is accurate, everyone wins.”
Ed Mierzwinski, a senior director at U.S. PIRG, a nonprofit advocacy and research center, notes that our financial data is provided to the credit bureaus without our having a say in the matter. “Yet,” he says. “When problems arise, consumers can get saddled with the heavy administrative burden of having to dispute errors.”
Thankfully, after CR asked Affirm to review Chamber’s case, the company agreed the loans were fraudulent and said it would no longer report them to Experian. “Consumers are not held responsible for any Affirm purchases that are found to have not been unauthorized, and we take this type of activity very seriously,” a spokesperson told CR, adding that consumers should contact Affirm if they suspect unauthorized activity.
Here we’ll explain the kinds of mistakes study participants found in their reports and what you can do to keep your credit safe.
Incorrect Financial Information
Perhaps most worrisome are errors that affect a person’s creditworthiness, as happened to Chambers. In CR and WorkMoney’s study, slightly more than a quarter (27 percent) of participants who checked their credit reports said they found errors related to debt. Those included finding an account they didn’t recognize, having one or more on-time payments wrongly reported as late, having at least one payment incorrectly identified as missed, and debt reported to collections that the person didn’t recognize.
These kinds of financial inaccuracies can lower your credit score dramatically. In Chambers’ case, her score dropped from over 800 to 500. The dollar cost of that is significant. For example, in the case of a typical mortgage, “the difference between having mediocre credit and good credit is about $150,000 over the life of the loan,” says Carrie Joy Grimes, CEO of WorkMoney.
Trouble With Student Loan Forgiveness
One problem that cropped up in the study regards consumers’ difficulty getting student loan information on their credit reports updated after the Biden administration recently granted billions of dollars in student loan forgiveness in various programs. Some told us those debts still appear as unpaid even though they have been forgiven.
One 56-year-old woman from Hickory, N.C., who said her student loan was forgiven last year discovered that her credit report still shows it as debt with a balance. Similarly, a 52-year-old man in Moorhead, Minn., said his student loans, which he’d paid off, are still shown on the reports with open balances.
“Consumers who’ve paid off student loans, or had them forgiven, deserve to have that information clearly reflected on their report so that it positively contributes to their credit score,” says CR’s Reynolds. “The situations these folks describe are unacceptable.”
Incorrect Personal Information
Thirty-four percent of people in the study said they found errors relating to their addresses, work history, and even their names. In some cases, family members’ files were crossed with theirs. One 66-year-old in Keyser, W.Va., said his son’s bad credit wound up on his report. “I disputed the inaccurate information and was rejected. Pissed me off and I gave up.”
In another case, an 82-year-old man from Swartz Creek, Mich., said, “I was quite surprised to learn I had a wife.”
One way many of these sorts of errors could be avoided, is by requiring credit bureaus to improve their protocols for matching information they receive from banks and other financial institutions with an individual’s credit file, says CR’s Reynolds. Credit bureaus match just seven of the nine digits of a person’s Social Security number, Reynolds says. Though they also often use name and date of birth information, they are not required to do so.
“The credit bureaus should be required to always match the first name, last name, date of birth, and full Social Security number when placing information on a consumer’s reports,” Reynolds says.
Difficulty Getting the Credit Report
Also alarming is the high number of participants—25 percent—who were unable to access their reports to review them in the first place. Some said they couldn’t get past the security questions, while others said that once they got into the system they received error messages.
Some consumers also said they were hit with offers to sign up for monthly subscription services for credit monitoring after attempting to get their reports.
“Equifax was the worst at making the report hard to find,” said one 67-year-old participant from Toledo, Ohio. But “all three made attempts to have me sign up for additional services.”
Reynolds, at CR, notes that consumers are currently afforded access to check their reports once a week for free.
”The fact that so many can’t seem to get through to the bureaus to complete their request online is a big problem,” he says. To combat that, CR is advocating for the bureaus to reconfigure AnnualCreditReport.com to make looking up a report simpler and for the bureaus to make it easier for consumers to prove their identity while keeping the transaction secure and private.
In response, the Consumer Data Industry Association says that at least one of the credit bureaus lets users opt to use a one-time PIN sent by text or email to unlock their report. A consumer is asked a series of authentication questions only if that isn’t possible.
How to Protect Your Credit
One way to reduce the risk of problems big and small with your credit is to take a few protective measures, says Grimes at WorkMoney. These include:
Regularly review all three credit reports. You can do this free at AnnualCreditReport.com, or at each of the credit bureaus’ websites. (You can also request your credit report by mail if you’re unable to get the report online.) While reports are available on a weekly basis, checking all three credit bureau reports once a month should be sufficient, Reynolds says.
Sign up with your bank to receive alerts every time there is a transaction. It may be annoying, but it’s an easy and fast way to discover if an account is being used by someone other than you, Grimes says. To sign up, go to the bank or credit card company website and opt in to receive text or email alerts for each withdrawal, deposit, or charge posted to or from your account, and to be notified of any potential fraudulent activity.
Sign up for free credit score or credit report monitoring if offered by your credit card company or bank. That’s how Chambers of Washington state first noticed that something was wrong with her credit report. She received several alerts that her credit score had decreased and that there were unpaid charges from the loans in her name. “I’ve been working so hard to get my credit perfect after my divorce so that I could buy a house,” she says. “But that’s when I saw that there was a charge for this company I’d never heard of.”
If you were notified that your data was exposed as part of a large data breach, take advantage of free monitoring services offered. That’s what one 81-year-old man from Greenwood, S.C., did after one of his accounts was part of a breach. “I use the basic service [and ignore] the frequent invitation to upgrade at a modest cost.” So does another study participant, 64, from Momence, Ill., who was offered free credit monitoring for a year by his mortgage company after it experienced a hack of customer data.
Good to know: If your data has been exposed, and you’ve also been offered free identity theft protection, consider signing up. These services can spot early signs of identity theft by scanning credit applications, public records, and other sources for your personal information.
Consider freezing your credit at each of the three credit bureaus. This is one way to prevent fraudulent accounts from being opened in your name, the CFPB told CR. Do this by going to each of the three credit bureau websites, logging in to your account, and setting it to “freeze.” You can also request that your report be frozen by phone or mail. You’ll find instructions to freeze your report at each major bureau on this USA.gov page.
Good to know: You’ll need to unfreeze your account if you wish to apply for a loan or other credit, so keep your password, PIN, and log-in information in a safe place to avoid having trouble reaccessing your files.
One of CR’s policy recommendations is that the bureaus freeze consumers’ credit files as a default, Reynolds says. That would stop anyone from accessing your credit information without your approval.
Spot a mistake on your credit report? File a dispute. To do this, first gather up your evidence—account statements and payment records, for example, and print them out. Then write a letter to each of the three credit bureaus. Make copies of the entire packet, include one for yourself, and send them via snail mail, certified, to each of the credit bureaus. “You want to create a paper trail,” Reynolds says. Companies have 30 days to respond. If that doesn’t result in the decision you want, you can then file a complaint with the CFPB. And if that, too, is denied, consider hiring an attorney who specializes in credit law. You can find one in your area through the National Association of Consumer Advocates.
How to Handle Identity Theft
If you’re one of the nearly 24 million Americans each year who are the victim of identity fraud, go to the FTC’s IdentityTheft.gov as soon as you discover the breach. The site provides an easy-to-use, step-by-step tool to file a report with the FTC and generate documentation you’ll need when working with the various credit card companies, banks, or other entities where the fraud occurred.
Editor’s Note: This article was updated to include more details about the number of participants who were able to access their reports and the percentage of errors found that were considered serious.
