Alert February 19, 2013

FTC Releases Study on Accuracy of Credit Reports

In accordance with its obligations under the Fair and Accurate Credit Transactions Act, the FTC published its fifth interim report on its study of the U.S. credit reporting industry, specifically with respect to credit reporting accuracy. The study is the first major one of its kind to look at all the primary groups that participate in the credit reporting and scoring process: consumers; lenders/data furnishers (which include creditors, lenders, debt collection agencies, and the court system); the Fair Isaac Corporation, which develops FICO credit scores; and the national credit reporting agencies.

The FTC report notes that, among other things, the study concluded that 26% of participants found potentially material errors—defined as an alleged inaccuracy identified by the participants—on at least one of their three credit reports; that 13% of those with potentially material errors obtained a change in their credit score as a result of modifications made to correct the errors; and that the vast majority of errors were related to consumer accounts. The report also discusses the dispute processes participants completed to address errors and encourages consumers to regularly check their credit reports.