The FTC’s Credit File Accuracy Study…Fair and Balanced

credit-applicationYesterday the FTC released their long awaited credit file accuracy study.  It consumed my day.  I did 14 interviews with major media outlets and I went to bed dead tired at 8:00. But enough about me.

While the press coverage has been pretty consumer sided, which is reasonable, the FTC study actually tells two stories, one that also suggests credit reports aren’t as inaccurate as suggested.

For those of you who have a copy of the study, look at page 78 of the 370 page PDF file.  This is a comparison of the FTC’s study results as compared to the results of a credit file accuracy study performed by a credit industry funded organization called “PERC.”  The FTC, who doesn’t really have a dog in the credit file accuracy fight, concluded the following…

6.6% of the reports examined resulted in a score increase.  That means that >93% of the credit reports in our “system” are accurate to the point that your credit score wouldn’t change one point if any alleged errors were corrected.  Pretty good.

2% of reports examined in the FTC study, which were corrected, saw a credit score increase of >25 points.  The industry clearly wants 100% accurate credit reports so I can’t imagine they’re happy about this statistic.  But, it does suggest that 98% of credit reports would score within 25 points of their “correct” score, as is.

And finally, 2.2% of the study participants had a credit score increase such that the consumer would have moved into a better credit risk tier and been given a better deal from a lender after they disputed their credit files and had them corrected.  That means that 97.8% of consumers would NOT see a different offer from a lender with their current credit file, as is.

Now, before I go on I want to make something crystal clear.  I am not a consumer advocate. More importantly, I am NOT an industry shill.  Being either disallows you from considering anything other than a position that fully supports your side’s agenda, which incredibly ridiculous.

Also, read >  What's In A Credit Score?

I get paid $0 from consumer groups and $0 from industry groups. I am an umpire.  I call balls and strikes as I see them.  If the industry is right, I will defend them aggressively.  If the industry is wrong, watch out.  Executives in the industry don’t care for me.  And, some big ballers in the consumer world don’t care for me either.  I simply will not sell out to either side so you should take my coverage of this “file accuracy” issue as balanced.

Name another industry where a 98% satisfaction rate would be criticized.  Do your flights arrive on time 98% of the time?  Does your food come out of a restaurant’s kitchen to your liking 98% of the time.  Are you happy with your cable provider or cell phone provider 98% of the time?  Are you happy with your wife, husband, kids, friends, boss, IRS, boyfriend, girlfriend, or co-workers 98% of the time?  Of course you’re not.

Now, I recognize that having an accurate credit report isn’t the same as your chicken salad coming out to your liking.  I’m trying to convince angry people to put this credit file accuracy study in perspective.  When you take delivery of billions of pieces of information every month mistakes are going to happen. And yes, some people are going to get abused by the system…and that stinks and it’s unacceptable.

I just think we all need to calm down a little bit and look at the entire picture before melting down. The data, from the organization that protects you (FTC), suggests that things aren’t all that bad.  I told a reporter from the New York Daily News that while the statistics are troubling they don’t suggest credit report Armageddon.  Let’s keep things in perspective, please.

JRU on 60 Mins SetCredit Reporting Expert, John Ulzheimer, is the President of Consumer Education at, the credit blogger for, and a Contributor for the National Foundation for Credit Counseling.  He is an expert on credit reporting, credit scoring and identity theft. Formerly of FICO, Equifax and, John is the only recognized credit expert who actually comes from the credit industry.  Follow him on Twitter here.