CREDIT REPORT INACCURACIES LOWER CREDIT SCORES

Consumer credit reporting inaccuracies and incompleteness greatly affect credit report scoring, which is recognized by financial institutions, the Federal Trade Commission, Congress, and consumer advocacy groups. In an effort to control inaccurate credit reporting, consumer protection laws where developed. Unfortunately, most consumers are unaware that they have inaccuracies on their credit report until they apply for credit, a vehicle or home loan. Not only can inaccuracies result in a denial of financing, but can have a severe impact on credit or loans, credit potential or loan capacity, in addition to increased interest rates resulting in hundreds or thousands of dollars lost over the lifetime of a consumer’s loan or credit issued.

A recent study found that inaccurate and incomplete information in consumers’ credit files can lower their credit scores enough to raise their mortgage rate quotes dramatically.

It is estimated that 40 million consumers are at risk of being misclassified into sub-prime (higher-rate) market because of errors or missing information in their credit files. Nearly 80% of all files examined were missing a revolving account in good standing. One of every 3 were missing a mortgage account that had never been late, and 2 out of 3 were missing installment accounts that had already been paid on time. Negative information can harm your credit score, but a lack of positive credit information can attribute to hundreds of thousands of extra dollars paid yearly in interest.

According to data compiled from approximately 5,000 lenders in a survey for Fair, Isaac & Co., consumers with;

Credit scores of 710 were quoted an average of 6.01% for a
30 year fixed-rate loan

Credit scores of 660 were quoted an average of 7.7% for a
30 year fixed-rate loan

On a $200,000 mortgage, that translates out to $4,500 higher principal and interest payments per year – all because of what the study suggests may be incomplete or erroneous information in one or more of a consumers credit report file.

Here are some more figures for you to consider (compiled from a study performed by the U.S. Public Interest Research Group):

Nearly 1/3 of all consumer credit bureau reports contain serious errors
that could cause unfair denial of a car loan, a mortgage or even a job.

29% of the credit reports contained serious errors, such as false
delinquencies or accounts that did not belong to the consumer in
question, and 70% contained errors of some kind.

41% of the credit reports contained personal demographic identifying
information, such as addresses, that were misspelled, long-outdated,
belonged to a stranger or were otherwise incorrect.

20% were missing important information that could demonstrate the
credit worthiness of the consumer.