In some ways, the American credit reporting system has improved. Credit freezes, which lock our credit information to deter identity theft, are now free and fast. We have free weekly access to our credit reports, courtesy of Equifax, Experian and TransUnion credit bureaus, until April 20, 2022. Free credit scores provided by banks, credit card issuers and others companies make it easy for us to monitor for signs of fraud and other issues.
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.
Errors abound in credit reports
A 2012 Federal Trade Commission study found that 26% of consumers had an error on at least one of their credit reports, while 5% reported inaccuracies serious enough to potentially trigger interest rates or premiums. higher insurance.
Nine years later, accuracy is still an issue. Earlier this year, Consumer Reports recruited nearly 6,000 volunteers to check their reports. The results: 34% found at least one error or one account they did not recognize. (Unlike the longer-term FTC study, the Consumer Reports effort was not a representative sample of the population, says Syed Ejaz, political analyst and author of the Consumer Reports study.)
There just aren’t enough incentives for the credit bureaus to do it right. Their main clients are financial institutions that can profit if someone who is creditworthy is charged a higher rate because of an error, says freelance journalist Bob Sullivan, author of “Your Evil Twin: Behind the Identity Theft Epidemic “.
“We say it all the time, but I feel like we never say it enough: we are not their customers. Banks are their customers, ”says Sullivan.
Because commercial interests overshadow consumer concerns, government must step in. The FTC and the Consumer Financial Protection Bureau should set more stringent precision regulations and enforce those already in place, Ejaz says.
Credit bureaus take advantage of consumer confusion
Look for “free credit report”, “annual credit report” or even “AnnualCreditReport.com”. The first results are likely to be advertisements for other sites that improve credit monitoring. The real site is often in the middle of the page, with no indication that this is the official federally mandated place to get free credit reports.
People are understandably confused when they click on 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 site 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 per month.
The real site should be the first search result for keywords related to free credit reports. Additionally, any business purchasing ads for these keywords should be required to have a prominent button that says something like “Looking for AnnualCreditReport.com?” Click here ”with a link to the correct site. Search engines, credit bureaus, and other credit monitoring companies are unlikely to do this on their own, so lawmakers must act.
While we’re at it, let’s drop the idea that accessing our credit reports should only be once a year, or whatever pace the bureaus have stopped. This is our data, usually collected without our permission and without any way to unsubscribe. If the credit bureaus don’t extend our access, Congress should.
Identity “verification” systems block the wrong people
More than one in 10 people in the Consumer Reports study said it was “difficult” or “very difficult” to get their credit reports, often because they couldn’t answer the check questions. identity of offices.
Do you know who has no problem with these questions? Identity thieves. They use information from database breaches, such as the massive one from Equifax that exposed the sensitive financial data of most American adults, to access people’s credit reports with relative ease.
“You don’t remember who owns your mortgage because it has been sold five times. But a criminal has all the information in front of him, ”says Sullivan.
Sullivan has some sympathy for the credit bureaus. Finding the right balance between security and convenience can be difficult.
One solution is to make the information on credit reports, primarily Social Security numbers, less valuable. These numbers were meant to track our income history, not to be a universal identifier. Stolen Social Security Numbers Allow Criminals To Open Fraudulent Credit Accounts, Steal Tax Refunds, Obtain Medical Care Using Someone Else’s Insurance And Even Impersonate for someone else if they are arrested. Other countries have separate identification systems for different uses; U.S. too.
Another more radical but perhaps necessary reform suggested by Consumer Reports: Credit reports should be frozen by default, which means consumers would have to give their consent before their information can be shared.
You don’t have to wait for government reform, of course. You can freeze your credit reports for free now. “A credit freeze can put control of the credit report in the hands of the consumer,” says Ejaz.
This article originally appeared in NerdWallet.