CREDIT MISTAKES VS. INACCURATE REPORTING.

25 Jan 2016

Credit mistakes vs. inaccurate reporting.

Credit mistakes originate in many ways. To pretend that making a credit mistake before the age of 30 is newsworthy is more laughable than newsworthy. Nevertheless, a new study by Credit Karma as cited by CNBC suggests just that… 68% of consumers are likely to make a “credit fumble” before the age of 30. While this may be true, and obvious to anyone, the implication is less than laughable. Yes, people are likely to make credit mistakes. But, this does not account for the totality of credit issues in an individual consumer’s credit reports.

Do credit mistakes come from consumers?

If you’ve ever applied for or used credit, you know that it is possible to make a mistake. You could miss a payment, you could get a medical collection, etc. There’s no question that consumers can make credit mistakes. So yes, consumers can make credit mistakes. However, that’s not the focus of this article. Let’s focus on both sides of the fence, not just harping on the “68%” who have had a credit fumble.

Do credit mistakes come from credit bureaus?

You may think a multibillion-dollar industry is devoid of mistakes. And if you do think this, you’re wrong. The credit bureaus are sued more often than the Obama administration. The credit bureaus were sued so often that the government created multiple laws regulating the way in which credit information is reported and corrected. In fact, many studies have shown that these mistakes (some reporting that as many as 79% of consumer credit reports contain errors) have misplaced some consumers into subprime markets.

Do credit mistakes come from creditors?

Similar to the credit bureaus, creditors also are the cause of credit mistakes and consumer credit reports. Clark Howard recently reported that consumers were being taken advantage of by legal proceedings. You can read the article here, but they were essentially filing lawsuits hoping that you did not respond and getting default judgments against you in order to avoid all the legal requirements of collecting on debts and reporting them accurately to the credit bureaus.

Conclusion.

We all have a responsibility to ensure that we take our financial obligations seriously. And when I say “all,” I am talking about you, the credit bureaus, creditors, bureaucrats, judges, etc. So, while the CNBC article and the credit karma survey are technically correct that 68% of consumers have a credit fumble before the age 30, I’m more concerned with the other side of the equation. That is, the fact that the remaining 32% also experience the negative effects of inaccurately reported credit information without having a credit fumble (thanks to the credit bureaus and creditors). Finally, the next time you hear what appears to be outlandish surveys, remember that there are two sides to every story.

 

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