Consumers can hit annoying snags when trying to order a free copy of their credit report.

3 minute read

A new study from Consumer Reports, based on surveys with nearly 6,000 consumers, reveals a “fundamentally broken” credit reporting system, at least when it comes to the accuracy of  reporting or obtaining a free copy of your credit report. “A Broken System: How the Credit Reporting System Fails Consumers and What to Do About It” based its findings on surveys of consumers that Consumer Reports asked to check their credit reports as part of the organization’s “credit check-up” project.

If you haven’t reviewed your credit report lately, it’s time to take a close look at the information that makes up your credit score and credit history. Through April 20, 2022, you can order up to one free copy of your credit report weekly at AnnualCreditReport.com or from the three major credit bureaus: Experian, TransUnion and Equifax.

That’s because your credit report doesn’t just affect your approval chances for credit cards, car, mortgage and other loans. Potential employers may also look at your credit and payment history when making a hiring decision, and landlords may turn you down based on a background check that includes findings from your credit report. Your credit standing can also affect the rate your insurance company charges for car and homeowner insurance policies.

Plenty of consumers found errors on their credit reports

More than one-third of consumers (34%) who participated in the Consumer Reports study said they found at least one error on their credit reports from the major credit reporting bureaus. The errors included inaccuracies in the consumer’s personal information, with more than half of the errors pertaining to the person’s address information.

Around 15% found that accounts in forbearance were not being correctly reported as “current,” and 11% found errors reported in their account information. “Among those who found errors in account information, 41 percent saw accounts they didn’t recognize,” according to the study. “Others found debt reported to collections that they didn’t recognize, one or more payments reported late that they recalled having made on time and missed payments that they knew they had made.”

Some struggle to access their reports

Of those surveyed in the Consumer Reports study, one in ten said they found accessing their credit reports to be “difficult” or “very difficult, mainly due to being locked out of their credit reports because they couldn’t answer identity verification questions.

Security questions used to verify were sometimes from accounts used years ago, said consumers surveyed for the study, posing a problem with recollecting information needed to verify their identity and access the credit report.

Surprise charges came with some “free” credit reports

Even though consumers currently have access to one free credit report a week, some of those surveyed told Consumer Reports that a credit bureau marketed other products to them while they tried to access their report. Others found they were charged a fee as they went through the process of requesting a free copy of their credit report.

Those surveyed may have unwittingly clicked on a pop-up window asking them to sign up for a low-cost service at trial rate. One person reported being charged $25 to his credit card by one credit reporting agency for a “membership” when ordering a free credit report but receiving a swift refund after disputing the charge. Others surveyed avoided unwanted charges by simply clicking past offers for any paid services.

Consumers find the credit reporting process confusing

The Consumer Reports study found that some consumers found the credit reporting system “confusing to navigate and understand.” They didn’t understand why their credit score didn’t appear on their credit report or why credit reporting agencies were marketing credit products to them while they were requesting a free copy of their credit report.

The credit reporting system is flawed

Several aspects of the credit reporting system appear to be “fundamentally broken,” according to the Consumer Reports study:

“CR’s current study, as well as previous research on the topic, suggests that credit report errors are all too common. The credit reporting system was originally designed to serve the interests of financial institutions and continues to function in much the same way – despite its massive and growing effects on the economic welfare of ordinary consumers.”

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About the Author

Deb Hipp

Deb Hipp

Deb Hipp is a full-time freelance writer based in Kansas City, Mo. Deb went from being unable to get approved for a credit card or loan 20 years ago to having excellent credit today and becoming a homeowner. Deb learned her lessons about money the hard way. Now she wants to share them to help you pay down debt, fix your credit and quit being broke all the time. Deb's personal finance and credit articles have been published at Credit Karma and The Huffington Post.

Published by Debt.com, LLC