New Report Finds U.S. Consumers Overlook Credit Reports

07 Jan New Report Finds U.S. Consumers Overlook Credit Reports

Most people know just how important their credit score is, especially when it comes to purchasing a big ticket item like a car or house. But a new report finds that U.S. consumers are overlooking their credit reports. The report released by the Consumer Financial Protection Bureau (CFPB) found that only one in five people actually obtain a copy of their credit report each year.

The CFPB adds, “The most effective way for consumers to identify errors in their reports is to obtain copies and review them.” Many people’s reports contain errors that could negatively impact their ability to obtain a home loan, but the only way to challenge these errors is to know about them.

In 2011, there were between 32 and 38 million disputed items on consumer credit reports. And when consumers did dispute items their credit report housed, the CFPB found that nearly 40% of the disputes were in regard to debt in collections.

Richard Cordray, CFPB’s director, notes, “Credit reports on a consumer’s financial history and behavior can determine eligibility for credit cards, car loans, and home mortgage loans – and they often affect how much a consumer is going to pay for that loan. The industry is critical in our economy. Without credit reporting, many consumers would likely be unable to get credit.”

And the correlation between a good credit score and the ability to obtain a mortgage is quite clear. A recent Ellie Mae origination insight report, which represents 20% of all U.S. mortgage originations, found that the average FICO score for a closed loan in October was 750, while the average denied loan had a score of 706.