17th December 2014
More than a third of people who checked their credit report uncovered errors, a study has revealed.
The figure equates to nearly five million consumers, according to the study by uSwitch.com, and in some cases the errors could make it difficult for consumers to borrow money or open new accounts.
The most common errors were incorrect credit products or services listed (39%), the wrong address (23%) and the wrong name of the bank or company that provided credit (18%).
Of the 12 million who have been turned down for credit, 26% have turned to a payday lender and 21% to a pawn shop.
Only 38% of those who were turned down were automatically told the exact reasons by the lender.
Meanwhile, more than 15 million consumers have never even checked their credit report.
uSwitch.com has launched a campaign called, “It’s My Report”, calling for a fairer approach to the way credit reports are created and shared.
It said that mistakes on credit reports could be contributing to millions of people being refused credit or unfairly missing out on the best rates for financial products.
Credit reference agencies hold credit reports on virtually all UK adults, with the report providing a snapshot of a consumer’s credit accounts and other personal information.
Lenders use this information to decide whether to offer someone credit, usually by calculating a credit score for an application. Yet, simple errors can drag down a consumer’s score and lead to credit being refused.
This is at a time when personal debt is costing the British economy £8 billion annually, through the damage it causes to family life, employment prospects, mental and physical health as well as the cost to state services.
It is possible to rectify credit report errors, but it can be a lengthy process ..
David Mann, head of money uSwitch.com, said: “Credit report errors have a dramatic effect on our ability to access the best financial deals. If your report contains errors, you can quickly find yourself rejected for credit. As a result, the research shows many consumers are turning to more costly forms of obtaining credit and can end up with debt that’s difficult to manage.
“We perhaps place too much blind faith in credit reference agencies to maintain accurate data about us, when mistakes are almost inevitable. But the process to correct these errors is lengthy and complicated. The problem is further compounded by there being multiple credit agencies so the incorrect information held about us could be included in more than one report. This makes it harder for consumers to know where to turn.”