1SD Newsletter: July 2004
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1 in 4 Credit Reports have Major Errors

Last month’s newsletter introduced our Fact Sheet on Rapid Rescore, our service to quickly correct credit errors. Right on cue, the trade journals are reporting, “One in Four Credit Reports Contains Errors Serious Enough To Wreak Havoc For Consumers.” That drives home the need for Rapid Rescore.

From the headline you might think the consumer advocate group U.S. Public Interest Research Group has discovered something new. Sadly, their new survey, “Mistakes Do Happen: A Look at Errors in Consumer Credit Reports”, only confirms of fist full of earlier results from the Consumer’s Union, the Consumer Federation of America and US PRIG reports reaching back to 1990.

You already know credit files are full of mistakes, and that most consumers are clueless about credit. So, you might what to share these statistics with your clients:

• 25% of credit files contain serious errors that could result in the denial of credit, such as false delinquencies or accounts that did not belong to the consumer.
• 54% contain personal demographic information that was misspelled, long-outdated, belonged to a stranger, or was otherwise incorrect.
• 22% list the same mortgage or loan twice.
• Almost 8% are missing major credit, loan, mortgage or other consumer accounts that demonstrate the creditworthiness of the consumer.
• 30% contain credit accounts that had been closed b y the consumer but remained listed as open.
• Altogether, 79% contain either serious errors or other mistakes of some kind.

Norm Magnuson, Vice President of Public Affairs with the Consumer Data Industry Association defended the repositories by pointing out, “We do have 4.5 billion updates to file information a month, and that comes from 30,000 data furnishers. I’d be naive to tell you there couldn’t possibly be errors in credit reports.”

What he didn’t say is most consumers see their credit reports once every 10 years – maybe -- and that mistakes can creep in with every repository update cycle.

He also didn’t mention that in 2000, the Federal Trade Commission hit Equifax, TransUnion and Experian with a $2.5 million fine because they blocked “million of calls from consumer who wanted to discuss the contents and possible errors in their credit reports.”

It turns out the professional Loan Originator – that is, most of you reading this article -- is the consumer’s best friend when it’s time to correct credit file errors. Every month the repositories get over 1.5 million requests to change credit files, and most of they come as a result of a consumers relationship with a mortgage lender.

Of course, we can take some credit, too. In the hands of a mortgage professional, a 1 Source Data credit report, a Credit Analyzer estimate of score improvement opportunities, and the Rapid Rescore Service, are the fastest way to a clean credit file, a higher FICO score and a closed loan.