Study finds errors in credit reports 70% of Md. histories checked were flawed

March 13, 1998|By Marcia Myers | Marcia Myers,SUN STAFF

The pages of Alison McElhinney's credit history contained a few surprises when she looked at her credit bureau files recently.

Her mother's mortgage showed up under McElhinney's name. The Baltimore woman's student loan debt had doubled to

$50,000. And among six credit card accounts erroneously listed was one opened in 1972, when she was 6 years old.

Two years after passage of the federal Fair Credit Reporting Act, a new study by a national consumer group suggests that serious inaccuracies continue in many credit reports, and that consumers still struggle to get them corrected.

The law aimed to make it easier for consumers to quickly learn about mistakes in their reports and to get them corrected. But nearly one-third of the 133 credit reports reviewed by the U.S. Public Interest Research Group contained errors serious enough jeopardize job, loan or credit applications.

Maryland is among 10 states included in the survey.

"We want to alert consumers that it's still far too easy for credit bureaus to get bad information," said Daniel Pontious, executive director of Maryland PIRG. The group said 70 percent of the reports it reviewed contained errors.

McElhinney's credit records were among those reviewed.

After looking through the records, the 32-year-old Johns Hopkins University computer analyst believes they might explain why a local department store recently denied her a credit card, although she has little debt and no record of late payments.

Before moving to Maryland from Pennsylvania three years ago, McElhinney said, she thought she had cleared up small inaccuracies she found in her credit history. Her latest findings leave her unsettled about the prospect of future problems.

Yesterday, she waited to hear whether her application for an apartment in Mount Washington had been approved.

"I was hoping to be in the position to buy a house and am probably going to be doing that within the next year," she said. "Credit history is extremely important. If they're making these kinds of mistakes and putting my mother's information on my report, it makes me wonder where my information is going."

Associated Credit Bureaus Inc., the industry trade group, strongly disputed the PIRG report.

Credit bureaus issue more than 2 million credit reports a day in the United States, and federal regulators receive fewer than 5,000 complaints a year, said spokesman Norm Magnuson. The amount of credit carried by consumers is greater than ever, he said.

"If the proposition is that errors in credit reports are denying people access to credit, where is it?" Magnuson said. "How does credit continue to grow at the rate it does?"

But critics say consumers often don't know what's in their reports and are sometimes afraid to find out.

Among other findings in the PIRG study:

41 percent of the reports contained errors in demographics, such as long-outdated names, or other incorrect personal information.

20 percent were missing information on major credit, loan, mortgage or other accounts demonstrating the consumer's trustworthiness.

26 percent listed credit accounts that had been closed by the consumer but were listed as open.

15 percent of consumers participating in the survey never received the reports they requested from credit bureaus or were unable to reach credit bureaus despite repeated tries.

Federal law requires that credit bureaus investigate all consumer reports of inaccuracy and provide a written report of the investigation. If a consumer is denied credit because of information provided by a credit bureau, he or she is is entitled to a free copy of the report if it is requested within 60 days.

But two years after the federal law was approved and six months after its enactment, the problems remain significant, PIRG officials said.

"Several states, including Maryland, have already subjected [credit bureaus] to tougher standards, and the Federal Trade Commission has done the same," said Ed Mierzwinski, U.S. PIRG consumer program director. "It's completely legitimate to have expected improvement."

Maryland is among only six states where consumers are entitled to free copies of their credit reports each year, according to PIRG. The group supports tougher measures that would require credit bureaus to give all consumers free copies of their reports every year. Department stores, banks and other "data dealers" also should be held responsible for passing bad information to credit bureaus, consumer advocates say.

Once they identified problems in their credit reports, many of the study participants continued to have problems getting corrections.

McElhinney said she wrote to the three credit bureaus that supplied her with reports. One is investigating, the other two have not responded, she said.

PIRG asked the FTC yesterday to investigate credit bureau compliance with requirements to give consumers better access to their credit records.

"People shouldn't need to take responsibility for mistakes on these reports, but they really have to," said Alison McElhinney. "People should be afraid of not seeing their reports."

Pub Date: 3/13/98

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