A Federal Trade Commission (FTC) study of accuracy in the U.S. credit reporting industry has found that one in five consumers – an estimated 40 million Americans, according to a ‘60 Minutes’ report on the FTC study – had an error on at least one of their three major credit reports while five percent had significant errors on one of their credit reports that could result in less favorable terms for auto loans and insurance. The full text of the FTC report is available at http://www.ftc.gov/os/2013/02/130211factareport.pdf.
“These are eye-opening numbers for American consumers,” Howard Shelanski, Director of the FTC’s Bureau of Economics, stated in a news release about the study. “The results of this first-of-its-kind study make it clear that consumers should check their credit reports regularly. If they don’t, they are potentially putting their pocketbooks at risk.”
The results of the just released study – ‘Fifth Interim Federal Trade Commission Report to Congress Concerning the Accuracy of Information in Credit Reports’ (December 2012) – include the following:
- One in four consumers identified errors on their credit reports that might affect their credit scores;
- One in five consumers had an error that was corrected by a credit reporting agency (CRA) after it was disputed, on at least one of their three credit reports;
- Four out of five consumers who filed disputes experienced some modification to their credit report;
- Slightly more than one in 10 consumers saw a change in their credit score after the CRAs modified errors on their credit report; and
- Approximately one in 20 consumers had a maximum score change of more than 25 points and only one in 250 consumers had a maximum score change of more than 100 points.
Section 319 of the Fair and Accurate Credit Transactions Act (“FACT Act”) requires the FTC to conduct a study of the accuracy and completeness of consumer credit reports. The FTC report – the first major study to look at all the primary groups that participate in the credit reporting and scoring process – was based on work with 1,001 participants who reviewed 2,968 credit reports with an associate who helped them identify and correct possible errors on their credit reports.
The FTC study also encourages participants to use the Fair Credit Reporting Act (FCRA) process to resolve any potential credit report errors. Consumers wishing to access a free credit report once every 12 months from each of the three national credit reporting companies – Equifax, Experian, and TransUnion – may do so by visiting the AnnualCreditReport.com website at https://www.annualcreditreport.com/.
The report from CBS News ‘60 Minutes’ which aired on February 10, 2013 – ‘40 Million Mistakes: Is your credit report accurate?’ – estimates as many as 40 million Americans have a mistake on their credit report while twenty million have significant mistakes. The investigation of credit reporting companies, a four billion dollar a year industry that keeps files on 200 million Americans, also claims those mistakes can be nearly impossible to remove. Both a full script of the ’60 Minutes’ report and a link to the segment are available at http://www.cbsnews.com/8301-18560_162-57567957/40-million-mistakes-is-your-credit-report-accurate/.
Employment Screening Resources (ESR), a nationwide background check provider accredited by the National Association of Professional Background Screeners (NAPBS), has long advised employers to approach credit reports with caution and to use only when there is a clear nexus to the job while keeping in mind the possibility of such errors as mentioned in the FTC and ’60 Minutes’ reports.
To help consumers better understand credit checks, ESR founder and CEO Attorney Lester Rosen co-authored a white paper titled ‘The Use of Credit Reports in Employment Background Screening – An Overview for Job Applicants’ that shows the many protections job applicants have when it comes to credit reports. The white paper also points out the fact that an ‘Employment Credit Report’ differs from the standard credit report in several ways and does NOT contain three-digit credit scores. The complimentary white paper is available at https://www.esrcheck.com/Download/.
Employment Screening Resources (ESR) also offers information about ‘U.S. States with Laws Regulating Credit Reports for Employment’ for employers considering using credit checks. Currently, eight states – California, Connecticut, Hawaii, Illinois, Maryland, Oregon, Vermont, and Washington – limit or prohibit the use of employment credit checks by employers. For summaries of the laws and links to the actual text, visit https://www.esrcheck.com/States-with-Laws-Regulating-Credit-Reports-for-Employment.php.
In addition, the updated 2nd edition of ‘The Safe Hiring Manual – The Complete Guide to Employment Screening Background Checks for Employers, Recruiters, and Jobseekers’ (Facts on Demand Press / 736 Pages) by Attorney Lester Rosen that was published in October 2012 contains an entire chapter on the use and misuse of credit reports for employment purposes. For more information about the book, visit https://www.esrcheck.com/SafeHiringManual.php.
For more information about background checks, visit Employment Screening Resources (ESR) – ‘The Background Check Authority’ – at https://www.esrcheck.com, call toll free 888.999.4474, or email [email protected].
About Employment Screening Resources (ESR):
Founded by safe hiring expert Attorney Les Rosen in 1997, Employment Screening Resources (ESR) – ‘The Background Check AuthoritySM’– provides accurate and actionable information that empowers employers to make informed hiring decisions for the benefit of their organizations, employees, and the public. CEO Rosen literally wrote the book on background checks with “The Safe Hiring Manual” and ESR is accredited by The National Association of Professional Background Screeners (NAPBS), a distinction held by a small percent of screening firms. Employers choosing ESR know they have selected an agency meeting the highest industry standards. To learn more about ESR, visit https://www.esrcheck.com or call toll free 888.999.4474.
About ESR News:
The Employment Screening Resources (ESR) News blog – ESR News – provides employment screening information for employers, recruiters, and jobseekers on a variety of topics including credit reports, criminal records, data privacy, discrimination, E-Verify, jobs reports, legal updates, negligent hiring, workplace violence, and use of search engines and social network sites for background checks. For more information about ESR News or to send comments or questions, please email ESR News Editor Thomas Ahearn at [email protected]. To subscribe to the ESR News Blog Feed, visit https://www.esrcheck.com/wordpress/feed/. To subscribe to the complimentary ESRcheck Report monthly newsletter, please visit https://www.esrcheck.com/Newsletter/.