60 MinutesSunday night 60 minutes aired a very shocking story relating to consumer credit reports. The segment, “40 Million Mistakes: Is your credit report accurate?” found that errors were a prevalent problem in consumer credit reports.
According to a government study mentioned in the segment, 40 million consumers in the United States have an error on their credit report (1 in 5 Americans), and 20 million have significant mistakes (1 in 10 Americans). The most alarming point is that those “significant mistakes” can be nearly impossible to get removed from a consumer’s credit report.
The three credit bureaus, Experian, TransUnion, and Equifax make upwards of four billion dollars annually gathering information from consumers and reselling that information to banks, merchants, insurance companies and employers to determine creditworthiness and reliability.
Now the reliability of that information is coming into question and will be the centerpiece of an 8-year Federal Trade Commission study that will be released today. The bureaus are claiming that banks and merchants have provided them with inaccurate information which in turn leads to these errors on credit reports. However the bureaus still need to comply with the FCRA (Fair Credit Reporting Act) consumer dispute process, which states that a person has the right to contact the bureaus to report any mistake on their report. Specifically the bureaus must conduct a reasonable investigation to determine if the information reported is accurate. Unfortunately, it appears that these investigations are not even occurring.
As Employers Choice Screening is in the background screening industry, we have an obligation to provide the most accurate and up-to-date information to our clients. We have to ensure employers are making an information hiring decision. However after viewing this investigative report, our industry as a whole may need to step back and re-evaluate the importance of utilizing credit reports in the hiring process.