FTC: Many credit report disputes go unresolved
By Fred O. Williams | Published: January 21, 2015
You have a right to dispute errors in your credit report, but if the credit bureau stands its ground, there's a good chance you're shouting into the wind, according to a study released Wednesday by the U.S. Federal Trade Commission.
Of 121 people whose complaints about an error on their report were rejected, 84 of them -- about 70 percent -- believe that wrong information was still displayed on their credit report a year later, the FTC study found.
Only about 30 percent agreed with the credit bureau's decision that the disputed information was accurate.
Furthermore, many consumers whose complaints are rejected do not remember being notified that the disputed information would remain on their report, or the reason why.
The findings "raise some questions regarding whether credit reporting agencies are, in some instances, failing to inform consumers in writing of the results of their reinvestigation," Commissioner Julie Brill said in a statement about the report.
The findings come from the commission's follow-up to a 2012 report on credit report errors. In that study, the FTC found that one in four consumers found a potentially serious error on their report. One in 20 found errors serious enough to put them in a higher risk tier -- meaning they would pay higher interest rates on loans, if they could get credit at all.
The follow-up report released Wednesday, which examines what happens to unresolved disputes in the earlier study, is the final report to Congress called for under the Fair and Accurate Credit Transactions Act of 2003. The law's best-known provision requires credit bureaus to provide a free copy of your credit report annually.
The dispute process for credit report errors has been the focus of heavy criticism by consumer advocates, some of whom call it a broken process.
The FTC's follow-up study relies on consumers' memory of events, Brill noted. As such, it may not be as definitive as the 2012 examination of credit report errors and their impact on credit scores.
Getting poll results. Please wait...
However, about half of consumers whose disputes were rejected do not recall receiving an explanation of the decision, a high rate.
Of people who believe their report still contains inaccuracies after a dispute, about half planned to drop their complaints, the FTC found. Among the reasons given were the error wasn't important enough to pursue, or the consumer did not have time to continue the dispute.
The number of consumers who abandon their disputes is "surprisingly high," Brill's statement said, "given the financial stakes involved."
The follow-up report also studied credit reports to see if errors reappeared after being removed, called "reinsertion." Only 1 percent of consumers experienced the reappearance of previously erased errors a year later, the FTC found.
"While it is reassuring to find that reinsertion is relatively rare," the report said, "the continued presence of the reinsertion issue suggests that consumers, the CRAs [credit reporting agencies] and policymakers must remain vigilant regarding the reappearance of negative information."
See related: Surefire ways to get errors off your credit report
- Q&A with author Emma Johnson on protecting credit as a single parent – As a single mom going through a big life change, it's critical to stay on top of your credit because that's when you're going to need it most ...
- Credit freeze laws in all 50 states – States have passed credit freeze laws to combat identity theft and fraud. Here are the details for each state ...
- 3 immigrants share how they achieved credit scores over 750 – Immigrants can achieve high credit scores in the U.S., even though our system is confusing ...