Frequently Asked Questions on Credit Reports
Q: Why are credit reporting agencies like Experian so important?
A: Credit data powers lending, commerce and our economy and enables consumers to have access to reasonably priced credit to get the things they need to live a productive life. Experian is the largest of the three national credit reporting agencies (CRAs). We provide detailed information that enables creditors to extend credit to consumers by verifying and validating a consumer’s credit history. We are one element of the lending institution’s decision making process which primarily involves supplying an individual’s credit history and applying credit scoring models to calculate credit scores. Rather than relying on a storeowner or a bank’s personal judgment and the biases that could accompany it, credit reporting agencies ensure transparency and objectivity in the credit system. A credit report does not only affect what credit someone can access but also how much they pay for it, as lenders link the lending terms such as interest rates and fees to the risk that a person will not repay the debt. It means that a poor credit history can result in more costly credit repayments.
Since credit reporting agencies like Experian are only one piece of the credit equation, there are things consumers can do to improve their credit scores. Simple things, such as making payments on time, keeping balances low on credit lines and only applying for the credit that is needed can help improve the credit equation. If an individual can remain vigilant in monitoring their credit and managing it well, they can improve their credit scores.
Q: What is Experian’s role in credit reporting?
A: Experian has long been an advocate for helping consumers, providing credit information as well as decision-making services and tools to help educate them on the use and management of credit to improve their financial health.
As a company, Experian has created a culture of commitment in the way we work with consumers, because they are the reason we are in business. The existence of the credit bureaus helps fuel the economy and gives consumers access to the conveniences and efficiencies they have come to expect.
Currently, Experian helps more than 220 million consumers acquire, build, and improve credit by managing their credit histories. The information we maintain includes payment history for credit cards, mortgages, auto loans, and with Experian, rental payment history. We also maintain data on debt-related public records including bankruptcies, tax liens, and civil judgments, accounts that have been placed in collection and the number of credit inquiries into a consumer’s credit report.
Q. Some have claimed that under the current system, consumer disputes are never seen by anyone at Experian who can actually make an appropriate determination about the validity of the dispute/problem. Is this true?
A: As it relates to Experian this is not true. This is not reflective of Experian’s process.
Resolving disputes is core to Experian’s mission: we are good at it and we provide our employees with the right training and tools to get the job done. Moreover, our agents are trained to be proactive when considering information submitted by consumers; as needed, they include supporting information provided by the consumer with disputes. Specifically, we utilize a specialized platform, created and maintained by our industry and mandated by federal law, for our agents to communicate effectively with data furnishers when processing disputes. Our experience is that most consumers are confident that we have an effective dispute resolution process that allows them to correct errors through multiple channels.
Q: Is it true that Experian doesn’t let its agents intervene on consumer disputes?
A: Experian has procedures where its consumer assistance agents can and do question dispute responses directly with data furnishers. Our agents are trained to be proactive when considering information submitted by consumers; they do in fact have the ability to include supporting information provided by the consumer with each dispute.
Q: How often are inaccuracies found on credit reports?
A: Of the more than 4-billion individual accounts we manage, inaccuracies are rare. A recent study by the Consumer Financial Protection Bureau (CFPB) found that between 1.3 and 3.9 percent of all consumers disputed information on their credit reports (http://files.consumerfinance.gov/f/201212_cfpb_credit-reporting-white-paper.pdf). Additional research from the Policy and Economic Research Council (PERC) discovered that less than one percent of the time, errors on their credit reports resulted in a change to credit scores that would materially change eligibility for credit.
The Federal Trade Commission also states that consumer grievances about credit reporting account for only two percent of the FTC’s total number of complaints.
Q: According to some interpretations, the recent FTC report on data accuracy indicates that 10 percent of consumers have errors on their credit reports that would lower an individual’s score. Is that true?
A: The main focus of the study was the frequency of material errors. What the study REALLY says is that nearly 98 percent of reports are materially accurate; that is, only 2.2 percent of the credit reports in the study had errors that would materially impact a credit score and change a consumer’s lending tier and credit pricing.
Q: Who is responsible for these inaccuracies?
A: We view it as a shared responsibility between consumers, credit grantors who furnish the data, and credit reporting agencies, and each play a vital role in providing accurate data through several parts of the process. For example, credit bureaus and credit grantors must set quality standards for data reporting and invest in systems, processes, and management tools to ensure that those standards are consistently met. Consumers should do three simple things to help in this process: first, consumers must provide correct and consistent information on credit applications in order to lower the chances that incorrect identifying information is associated with an account. Second, consumers should review their credit report frequently to ensure that the information is accurate and complete. Ideally, the review should occur prior to applying for credit. And third, consumers should review monthly billing statements from their credit grantors to ensure accuracy of purchases and payment amounts.
Q: How is Experian helping to mitigate inaccuracies found in credit reports?
A: The integrity of data within our credit file is the cornerstone of Experian’s business and our consumer relationships. Given the importance of data accuracy, we invest the time and resources to ensure the credit files we maintain are as accurate, fresh and secure as possible. Our state of the art consumer credit database, File OneSM is the industry’s premier credit information database; we employ almost 100 specialized professionals that focus on testing the integrity of the data furnished to us and getting it loaded to our database quickly so it is an accurate reflection of each consumer’s credit record. Another example is that Experian is the only credit bureau to invest in and build its own data center exclusive for Experian.
We have invested in businesses and processes that enable Experian to have the highest-quality, freshest data for consumers. Experian has 13,000 data furnishers that provide updates to Experian. We measure and monitor data from all contributors every month and conduct an in-depth review of all of our major data contributors every 12-18 months. We also conduct various data integrity processes to ensure data quality including utilizing the National Change of Addresses (NCOA) catalog to ensure the best deliverable addresses in the country. We maintain an inventory of more than 400 data quality rules that are customized to the unique needs of clients, helping ensure the integrity of the data we receive before the data is loaded on to our database.
Q: There have been claims that lenders are provided more information than what consumers can see themselves. Is this correct?
A: No, this is NOT correct. In fact, consumers can view and dispute all information on their credit report, some of which lenders may not even see. This is why we recommend consumers visit annualcreditreport.com to secure their Experian report each year.
Q: What can consumers do to improve the accuracy of their credit reports?
A: The first thing consumers can do to minimize the number inaccuracies on their credit report is to be consistent and thorough when completing credit applications. Double check that they are supplying correct information when applying for a credit card or another type of credit, always use the same name or nickname (ie: Robert Smith, Rob Smith, Bob Smith). Print neatly if you are completing an application by hand to ensure the data entry person can read the information. If you are completing an application online, review your entries to make sure they are correct.
Review your credit report at least once a year. Experian strongly encourages consumers to get their free annual credit reports, examine them for inaccuracies and dispute any inaccuracies to the corresponding credit bureau. In an FTC study of consumer disputes submitted to their offices, they found that 90% were resolved “as requested by the consumer” by the credit bureaus prior to the Commission notifying the credit bureau of the dispute. Experian’s website is designed to achieve an appropriate and timely dispute resolution and, thanks to recent changes, more consumers are now tracking their issues online. A recent study by the Policy and Economic Research Council (PERC) found that nearly 72 percent of disputes are resolved within 14 days and 95 percent of consumers are satisfied with the outcomes.
Monitor your account billing statements each month. If you notice anything that raises concern such as erroneous late payment notices, unrecognized charges or bills for unrecognized creditors, you might review your credit report to make sure nothing erroneous has been reported and to ensure there are no signs of fraud or identity theft. If you should find any errors or incorrect information on your report, you should follow this step-by-step process to get the information corrected.
To improve your credit scores, you must improve your overall creditworthiness by changing your credit behavior over time. Time is a critical factor because credit scoring systems consider behavior over time, not just the current payment status of accounts.
Q: How long does it take to have an inaccuracy corrected on a credit report and what is Experian doing to improve this process?
A: According to a recent industry study from Policy and Economic Research Council (PERC), consumers are materially affected by an inaccuracy less than one half of one percent of the time. Despite that statistic, we understand how stressful it can be to find incorrect information on your credit report, especially if the incorrect information is found while applying for credit. Our consumer assistance agents make it a priority to have disputes resolved as quickly and as easily as possible.
To accommodate consumer preferences, we provide options on how consumers can initiate a dispute — either online, by telephone or by mail. Most consumers chose to utilize the online dispute system since it simplifies the process by providing choices for the most common dispute reasons and provides a way to check the status of the dispute during the process.
To better serve consumers and make sure they have the opportunity to ask questions, help them better understand how inaccuracies occur and how the resolution process works, our consumer assistance center established our “Stop the Clock” program. This program improved our consumer assistance by changing the focus. Instead of measuring the success of our customer service by the number of calls answered or the speed which those calls were handled, our agents are empowered to provide excellent customer service and spend time with each consumer to make sure their questions are answered and they understand any next steps if needed.
Through our “Guided Path Resolution” initiative that started in 2008, designed to innovate and improve interactions between consumers and our call center operations, we’ve reduced customer effort and increase customer satisfaction in a variety of ways:
- For example, in 2010 we initiated routing improvements to our experian.com website, which has made navigating our site much easier for consumers. We have also improved consumers’ ability to track their issues online and simplified navigation of the site.
- Created a “credit report assistance” center at www.experian.com to assist consumers in better navigating where they can dispute information online; obtain their free annual credit disclosure; request an initial or extended fraud alert; request a security freeze; and obtain additional information and advice about how to prevent and/or recover from identity theft.
In 1996, the credit reporting industry implemented an online dispute resolution system to drive greater accuracy and efficiency into the dispute resolution process. As a result, consumer disputes are sent to data furnishers online daily rather than relying on written documents sent by mail. Our online dispute resolution systems have been enhanced by numerous technology improvements, such as our document upload service for online consumers which have led to faster dispute resolution times which now average 14 days. This is less than half the time allowed by federal law.
Q: How is Experian helping consumers learn about their credit reports and how to effectively manage their credit?
A: Credit is not about just the amount of money we are able to spend. It is also a frequent measurement of our financial trustworthiness and credibility. That is why we make consumer education our top priority. As a company, we want to ensure consumers have the knowledge and confidence to proactively manage, build and improve their credit. In fact, Experian was the first credit reporting agency to initiate an overall consumer education program more than 20 years ago. Whether by providing accurate credit data or sharing analytic services and education tools, we are here to help consumers improve their financial health by introducing extra consumer services that go well beyond what’s required by the Fair Credit Reporting Act.
With that in mind, we created LiveCreditSmart.com to provide advice and resources to assist consumers with all of life’s financial needs, from buying a home to planning for retirement. At LiveCreditSmart.com, we also give access to the average national credit scores and the results of our consumer credit research.
In addition, we are reaching out to consumers in a myriad of ways to help them get “credit smart.” Our Experian Education Ambassadors program prepares employee volunteers to conduct education programs for consumer groups and community programs. Experian is the first in the industry to host live Facebook and Twitter chats, answering questions about credit scores and identity theft, and Experian was a founding partner of the Jump$tart Coalition for Financial Literacy, pushing for the inclusion of financial literacy education in our nation’s public schools.
Also, Experian is the only national credit reporting company that the U.S. Department of Defense invited to take part in its “Financial Readiness Tour” in 2009, helping more than 8,000 U.S. military troops, families and retirees better understand the consumer credit industry.
Q: What steps do consumers need to take to make corrections to their credit report?
A: The first step is critical: You must get your personal credit report directly from Experian before starting the dispute process. This can be either directly through http://www.experian.com or through www.annualcreditreport.com, which provides consumers their Experian credit report free once every twelve months. You can link to this blog to learn the additional steps: http://www.experian.com/blogs/news/2012/07/25/credit-dispute-process.
Q: There have been allegations that all the credit reporting agencies are breaking the law and are not in compliance with the Federal Fair Credit Reporting Act (FCRA). Is that true?
A: This is false. The industry serves as part of the economic backbone in the United States, and plays an important and effective role in the personal finance world.
Experian is in full compliance with all relevant laws and regulations. And, from an industry perspective, Federal courts have upheld our practices on multiple occasions. Further, Congress directed the Federal Trade Commission to conduct a year-long review of the dispute process and they did not find any violations of law.