Press Releases and Media Advisories
Data Integrity Issues for Credit Reports Under Scrutiny
February 4, 2005, 2:38 pm
A Credit Communique from Springboard about problems with the integrity of consumer credit reports.
Data integrity problems in credit reports have the cumulative impact of lowering the integrity of what the U.S. credit system is built on: the efficient collection, storage and use of the actual credit history records of individuals and the scores derived from these credit history files.
In August 2004 the Federal Reserve Board released a comprehensive study on the data quality issue in consumers’ credit files. Their study, “Credit Report Accuracy and Access to Credit”, can be accessed at http://www.federalreserve.gov/pubs/bulletin/2004/summer04_credit.pdf.
Errors can be either inadvertent or deliberate. The FRB Study identifies many examples of errors including:
• Ambiguous reporting of stale accounts.
• Inconsistent and duplicative reporting of public record items and collection accounts. Redundant reporting of these items magnifies their negative impact. Examples of this include open chargeoffs that have not been updated as having been discharged through bankruptcy or that have been sold, transferred or even paid off by the debtor but are still being reported by the original agent.
• Failure to consolidate multiple inquiries for the same loan.
• Mixing of files and incorrect personal information, including errors in generational data (Jr., Sr.). Examples of deliberate manipulations on the part of credit grantors and collection agencies include:
• Not reporting credit limits on trade lines. This raises the “utilization” factor since scoring models treat the reported balance as if it were the credit limit, making the consumer appear to have maxed out their trade line. Thus, a credit score is lowered by this practice.
• Withholding of credit reporting by some lenders for competitive advantage. Subprime lenders, in particular, exhibit this practice as does Sallie Mae, the largest student loan creditor. This prevents consumers from receiving credit that's due them for good payment history.
• Intentional mis-reporting of out-of-statute debts in order to force settlement. This has become a significant problem with the rise of the “junk debt buying industry” and reports of violations of Fair Credit Reporting Act and Fair Debt Collection Practices Act by these players are widespread.
The "Truth In Credit Reporting Coalition"
includes: Springboard Non-Profit Consumer Credit ManagementKorean Churches for Community DevelopmentNational Community Reinvestment CoalitionNeighborhood Housing Services of Los AngelesAffordable Housing ClearinghouseInstitute for Consumer Financial Education
About Springboard Nonprofit Consumer Credit Management
Springboard is a nonprofit credit education and financial counseling organization founded in 1974. The agency offers personal financial education and assistance with money, credit and debt management through confidential counseling. Springboard is accredited by the Council on Accreditation, signifying high standards for agency governance, fiscal integrity, counselor certification and service delivery policies. The agency provides pre-bankruptcy counseling and debtor education as mandated by the bankruptcy reform law. Springboard is a HUD approved housing counseling agency and a member of the National Foundation for Credit Counseling, a national organization of nonprofit credit counseling agencies. The agency has several locations in California and offers face-to-face and nationwide phone counseling services. For more information on Springboard, call 1-800 WISE PLAN (1-800-947-3752) ext. 7750 or visit their web site at www.credit.org.
