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Liz Weston: Credit information is still not as accurate, easy to obtain, or as safe as it needs to be

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By LIZ WESTON of NerdWallet

In some ways, the US credit reporting system has improved. Loan locks, which put our credit information on hold to prevent identity theft, are now free and fast. Courtesy of the Equifax, Experian and TransUnion credit reporting agencies, we have free weekly access to our credit reports through April 20, 2022. Free credit ratings from banks, credit card issuers, and other companies allow us to easily monitor for signs of fraud and other problems.

Unfortunately, our credit information is still not as accurate, easy to obtain, or secure as it should be. These failures mean that Congress and regulators must intervene.

A 2012 study by the Federal Trade Commission found that 26% of consumers had an error in at least one of their credit reports, while 5% reported inaccuracies serious enough to potentially trigger higher interest rates or insurance premiums.

Nine years on, accuracy is still a problem. Earlier this year, Consumer Reports recruited nearly 6,000 volunteers to review their reports. The results: 34% found at least one bug or account they didn’t recognize. (Unlike the longer-term FTC study, the Consumer Reports initiative wasn’t a representative sample of the population, says Syed Ejaz, policy analyst and author of the Consumer Reports study.)

There are just not enough incentives for credit bureaus to get things right. Their main customers are financial institutions, who can benefit from being billed a higher rate for someone who is creditworthy because of a mistake, says independent journalist Bob Sullivan, author of Your Evil Twin: Behind the Identity Theft Epidemic.

“We say it all the time, but I feel like it is never said enough: we are not their customers. Banks are their customers, ”says Sullivan.

As business interests dwarf consumer concerns, government must step in. The FTC and the Consumer Financial Protection Bureau should enact stricter accuracy regulations and enforce those already on the books, says Ejaz.

Search for “free credit report,” “annual credit report,” or even “AnnualCreditReport.com”. The first results are likely to be ads for other credit monitoring websites. The real website is often in the middle of the page without any indication that it is the official, federally mandated location for getting free credit reports.

People are understandably confused when they click the other links and are asked for a credit card – often after entering sensitive information, including their social security number and date of birth. (The real website doesn’t require a credit card.) They’re even more dismayed when their supposedly free credit reports turn into a recurring subscription that can cost $ 20 to $ 40 a month.

The real website should be the first search result for keywords related to free credit reports. Also, every business that buys ads for these keywords should have a prominent button that says, “Looking for AnnualCreditReport.com? Click here “for a link to the correct site. The search engines, credit bureaus, and other companies that provide credit monitoring are unlikely to do this on their own, so lawmakers must act.

While we’re at it, let’s ditch the idea that our credit reports should only be accessed once a year, or however the office decides. It is our data that is normally collected without our consent and without the possibility of opting out. If the credit bureaus don’t expand our access, Congress should do so.

More than one in ten people in the Consumer Reports study said it was “difficult” or “very difficult” to get their credit reports, often because they couldn’t answer office identity verification questions.

Do you know who has no problem with these questions? Identity thieves. They use information stemming from database breaches, like the massive one at Equifax, which has disclosed sensitive financial information of most adult Americans, to make credit reports relatively easy to access.

“You don’t remember who’s holding your mortgage because it was sold five times. But a criminal has all the information right in front of them, ”says Sullivan.

Sullivan has some sympathy for the credit bureaus. Finding the right balance between security and comfort can be difficult.

One solution is to make the information in credit reports, especially social security numbers, less valuable. These numbers should track our earnings history and should not be used as a general purpose identifier. Stolen social security numbers allow criminals to open fraudulent credit accounts, steal tax refunds, get medical care through someone else’s insurance, and even pose as someone else if arrested. Other countries have separate identification systems for different purposes; so should we.

Another, more dramatic, but perhaps necessary, reform proposed by Consumer Reports: credit reports should be frozen by default, which means that consumers would have to consent before their information could be shared.

Of course, you don’t have to wait for government reform. You can now freeze your credit reports for free. “A credit freeze can put control of the credit report in the hands of the consumer,” says Ejaz.

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This column was provided to The Associated Press by personal finance website NerdWallet. Liz Weston is a columnist for NerdWallet, a certified financial planner, and the author of Your Credit Score. Email: [email protected] Twitter: @lizweston.