Recently, comedian John Oliver brought attention to an important piece of personal information that can often get overlooked: your credit report. On his show Last Week Tonight, he reminded us that our credit score is not only extremely powerful, but it can often be immensely affected by incorrect data.
Your credit report is used by a number of different people or companies, such as landlords who are deciding to rent to you or banks trying to figure out a rate for your home or auto loan. But what you may not realize is that your credit score is often checked by potential employers when they’re deciding whether or not to hire you.
Why, exactly, does an employer need to know your credit score before hiring you? Recent reports have shown that 52% of debt shown on credit reports comes from medical debts. Should your past medical bills really be a solid indicating factor when determining if you’re employable?
According to the companies doing background checks on potential employers, their assumption is, “If you manage your credit well, it’s very likely you will manage the company’s money well.” However, recently the credit reporting company TransUnion admitted they had no real evidence of a correlation between a person’s good credit and his likeliness to manage his employer’s funds well or his unlikeliness to commit fraud.
How Errors May Happen
Perhaps a bigger issue than what your credit report is used for is the fact that an astounding number of consumers have found errors or discrepancies on their reports. When searching for hits on your credit, credit bureaus use an algorithm made of a partial name match and only seven of the nine digits of a person’s social security number. While they use this formula to ensure they can receive information on all possible matches to a person, it’s a good chance they will get incorrect information, such as the credit report of someone whose name or social security number is the same as, or similar to, the person they are actually trying to find.
The big 3 credit companies – Equifax, Experian, and TransUnion – claim that they have a 95% accuracy rating on their credit reports. However, these three companies have reports for as many as 200 million people, so when they say their reports are 95% accurate, it still means that around 10 million people may have incorrect information on their credit reports.
A minor error can be due to debt you already repaid, which lowers your score. These errors can cause you to get higher rates on your loans, or they can be the reason a financial institution outright rejects you for a loan.
A serious error can lead to much more complicated issues. Some consumers have reported the following serious errors on their credit reports:
- One man was denied an apartment because a credit report misidentified him as a terrorist.
- A woman was identified as deceased. She had an extremely difficult time getting the matter corrected because other companies couldn’t verify her information, despite the fact that she was indeed still alive.
- One woman had an entirely different individual show up on her report as one of her aliases; the person listed as the alias had several large unpaid debts on her report, which transferred to the original consumer’s name. It took the original consumer over six years to get the information on her credit report corrected.
- A man was mistaken for three different registered sex offenders because they all had the same name as him – even though one of the offenders had committed an act when the original consumer was only three years old.
John Oliver had his employees purchase their own credit reports and found that five of them had found incorrect information on them. One employee had been mistaken for another individual who had committed Medicaid fraud.
These mistakes are, unfortunately, not new. There have been reports of these errors for over 25 years now, so while the three big credit companies claim they have been working diligently to fix these problems, they still receive the largest amount of complaints at the Consumer Financial Protection Bureau.
Problems with Your Credit Report? Our Ohio Consumer Debt Attorneys Can Help.
An error on your credit report can be a costly mistake, and it’s one you should take care of quickly. It can be a difficult and slow process to correct these problems, so you may want to seek guidance from an experienced Ohio consumer debt attorney. Get answers to your questions about your credit report and how you can fix errors by contacting the Ohio consumer debt attorneys from Luftman, Heck & Associates today at (888) 726-3181 or firstname.lastname@example.org.