A new study has released its findings that less than 1-percent of consumer credit reports contain errors that lead to significant changes in scores. The report, which was commissioned by the three largest credit-reporting companies, said that after surveying 2,338 people the vast majority of credit reports are accurate.
The study was conducted by the Durham, North Carolina-based Policy and Economic Research Council for the top three credit bureaus, Experian, Equifax and TransUnion. After examining the reports of those surveyed from February to May 2010, the report revealed that errors are indeed rare.
The report is released right in time to present to the Consumer Financial Protection Bureau (CFPB), which will have new jurisdiction over consumer credit firms and is scheduled to begin work on July 21.
As determined by the law that created it, the bureau will have to produce its own study looking at the differences between reports provided to creditors and those given to consumers who are the subject of the reports.
Some might argue that the report could be biased since it was released only a few months prior to the bureau’s first day of work and was commissioned by the three reporting agencies affected by it the most.
However, David Musto, a professor of finance at the Wharton School of the University of Pennsylvania, who was interviewed by Bloomberg News, said it was “a well-executed study, in that the sample is large and appears to be representative.”
It should be noted, however, that the professor was hired by the council to examine the report.
Ed Mierzwinski, the director of the consumer program at the U.S. Public Interest Research Group had a slightly different opinion about the survey. In a Bloomberg interview, he noted the industry study could have underestimated the error rate by overestimating the number of consumers satisfied by bureau dispute resolution processes.
In other reports, he said, error rates have been closer to 25 percent. He believes that the CFPB report will likely provide a more accurate depiction of the realities of credit bureau reporting and its effects on consumers.
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