More than one in three credit reports contain errors
38% who checked their credit report in the last two years have uncovered errors – equating to nearly 5 million consumers
Most common errors include 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 why by the lender
Worryingly, over 15 million consumers have never even checked their credit report with a fifth (20%) of these saying they didn’t know they had one or that they could check it
Uswitch has launched, ‘It’s My Report’, a campaign with the backing of over 12,000 consumers, who are calling for a fairer approach to the way consumer credit reports are created and shared.
Mistakes on credit reports could wrongly be contributing to millions of British consumers being refused credit or unfairly missing out on the best rates for financial products, according to new research from Uswitch.com, the price comparison and switching service.
Over a third (38%) who checked their credit report in the last two years have discovered mistakes after requesting access to them, representing 5 million consumers. But this is just the tip of the iceberg, as over 15 million consumers have never even checked their credit report, suggesting millions more could be at risk from undiscovered credit report inaccuracies.
The most common errors found by those that checked include: the wrong products, such as credit cards, listed (39%); the wrong address (23%); and even the wrong name of the bank or company providing credit listed (18%) on the report.
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.
The research shows that 12 million consumers (25%) have been turned down for credit, or have not received the rate that they applied for. Many of those who have been rejected often turn to more expensive forms of credit, with over a quarter (26%) forced to borrow from payday lenders and one in five (21%) using pawn shops or cash for gold services. A fifth (20%) take out a credit card with a higher interest rate and 19% turn to unsecured loans with a higher interest rate.
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’s possible to rectify credit report errors, but it’s currently a lengthy process and consumers are unaware how to make changes. The research reveals that when consumers are turned down for financial credit, they are unaware about how these critical decisions are made – only 38% said they were told by the lender the exact reasons why they were refused without having to ask. Furthermore, 34% of those refused credit were given no explanation at all.
David Mann, Head of Money at Uswitch.com, says: “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.
That’s why we’ve launched ‘It’s My Report’, to make credit reporting free, fairer, and fit for purpose. We want all consumers to regain control of their own information and take action where needed to ensure they always get the best possible deal.”
Top credit report errors
A credit product or service was listed that shouldn’t have been there
The wrong name of the bank or company providing credit listed
The number of banks/companies listed who had provided credit was wrong
The wrong address
What can I do to correct any errors?
If you find an error on your credit report you can contact the lender or bank, and the credit agency who have 28 days to respond, during which time a notice is added to your file so creditors know what’s happening
Make sure you have a point of contact and a reference number to follow this up. The notice of correction can be up to 200 words, free of charge, putting forward your version of events. This will be seen by future lenders along with the information being disputed
A wrong address can be resolved simply by contacting the credit reference agency and providing the relevant proof
There are three credit reference agencies in the UK, Experian, Equifax and Call Credit. Mistakes can vary between these agencies so if you find an error with one agency it could be worthwhile to check the other two as well
For more detailed advice, go to www.itsmyreport.com
‘It’s My Report’ is calling for three fundamental changes:
Every person in the UK should get free access to their full credit report, including their credit score, once a year. This will allow them to verify everything is correct and get any errors fixed, as well as better understand all the pieces that make up their credit score.
A change in the law to make it mandatory for a person to be given the specific reasons why they have been turned down for credit when details from their credit report were a factor. This should be alongside free access to the full report used to make that decision.
A standardisation of the credit score scale used in the UK, so your score always means the same thing, regardless of the company you get it from.
Sign our petition for change at ItsMyReport.com
FOR MORE INFORMATION
Ailene Barr
Phone: 020 3872 5610
Email: ailene.barr@uswitch.com
Twitter: @uswitchPR
Notes to editors
All research referred to was conducted by Opinium unless otherwise stated. Opinium Research carried an online survey of 2,001 UK consumers aged 18 – 55+ between 7th – 9th October 2014. Percentages and figures not used in grossed up calculations refer to the proportion of the whole sample unless otherwise stated.
According to the ONS population projections for 2013, the estimated UK population aged 18+ was 50,371,000. In the survey, 195 people said that they had found errors in their credit reports in the last two years. This is 38% of those who have checked in that time and 9.7% of the total sample. 9.7% of the UK adult population would be equivalent to 4,908,718 people
According to the ONS population projections for 2013, the estimated UK population aged 18+ was 50,371,000.
491 people in the sample have applied for credit in the past and been turned down, this is 24.5% of the sample and equivalent to 12,359,901 people
According to the ONS population projections for 2013, the estimated UK population aged 18+ was 50,371,000. 620 people in the sample have never checked their credit score, equivalent to 31% of the total sample and 15,607,206 people
Source - The social cost of problem debt in the UK, StepChange Report, October 2014
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