For many people, a credit report is the most important document in their financial life. It helps determine everything from whether they can get a loan, lease a car, find a job, purchase insurance, or even buy monthly cable television or cell phone service.
Despite these far-reaching impacts, credit reports are sometimes riddled with errors. And those errors can have a real effect on your financial future. Something as simple as having the same name as another individual who failed to pay their bills on time can prevent you from receiving a loan or the lower interest rate for which you’re eligible.
Unfortunately, trying to correct those errors can often become a bureaucratic nightmare. Many consumers complain that they cannot get credit report mistakes fixed, or that errors are removed only to reappear later, sometimes when credit portfolios are sold.
This isn’t a small problem. Consumers have filed almost 150,000 complaints about their credit reports in the last four years, and even conservative estimates suggest that 6 million Americans have errors on their reports serious enough to result in a denial of credit.
The Dodd-Frank financial reform bill seeks to empower consumers and address these issues through stronger oversight and regulations. Under this legislation:
These common sense reforms will help protect and empower consumers. Given the important role that credit reports play in all of our financial futures, these initiatives have the capacity to make a real, positive impact in the lives of everyday Americans.
Michael Barr is Assistant Secretary of the Treasury for Financial Institutions