John Oliver on the Credit Reporting Industry
Earlier this month, HBO's John Oliver of Last Week Tonight did a segment on credit reports. The segment highlights studies which report major problems in the credit reporting industry. The studies reveal that credit reports contain a shocking number of errors. One study found that 25% of consumers had errors in their credit reports. That means that 1 and 4 credit reports have an error. The study further states that 1 and 20 credit reports contain sufficient errors that would make a consumer pay more for a car loan or a mortgage. Credit report errors vary by type and may be serious enough to deny an application for credit, housing or employment.
A common credit report error is a mixed credit file. In his late-night show John talks about a woman named Judy Thomas. Judy Thomas kept getting turned down for loans, and she didn't know why. She didn't know why until she looked at her credit report. Come to find out, Judy Thomas had a mixed credit file. This became obvious to her when she noticed debt from a medical center and veterinarian clinic in Utah for a Judith Kendall. Judy Thomas fought a six year battle trying to prove she was Judy Thomas not Judith Kendall. John continues to expose the shortcomings of the credit reporting agencies by pointing out a lawsuit from 2002 involving a different Judy Thomas who was suing TransUnion for a mixed file. If your name is Judy Thomas, you may want to check your credit report... .
In addition to your credit history, your credit report may be accompanied by criminal and driving records. John asks what if the credit reporting agencies match your name to a list of suspected criminals? Then he introduces a young man who after being denied an apartment, the landlord forwarded his credit report to him. The credit report had him listed a "Terrorist"! Worse yet, John goes on to mention a man named Samuel Jackson from Chicago. Sam's identity was mixed with that of three different sex offenders. And, despite the fact Sam would have been three years old at the time of one conviction, the credit reporting agencies blindly and wrongfully mixed the identity of the sex offender with an innocent man.
Even more absurd is when the credit reporting agencies declare you as deceased. John's segment acknowledges a woman named Helen McGill. Helen was shocked when she went to buy a home and found out she was dead. Any time she tried to get her credit report she kept coming up deceased. She even tried to pay to get her credit report but couldn't because she was deceased.
In the clip, John points out the hypocrisy between TransUnion's own website and spoken testimony of a company representative. The website stated that credit reports help employers make decisions quickly and easily when deciding on potential candidates. Then John goes on to show testimony between a TransUnion representative and an Oregon legislator. The legislator inquires about the evidence between credit worthiness and the quality of a potential employee. The TransUnion representative replies that they have no evidence between the two but one can draw the conclusion that someone with a good credit history would be better than someone with a lesser credit history.
Background check companies are many yet they are not closely monitored. In this piece John reveals that the government is not even sure how many background check companies there are. With half of all employers conducting background checks the accuracy of them becomes imperative. Just last year, the background check companies paid over $13 million in restitution due to the abundance of errors and lack of accountability. And, unlike the three credit reporting agencies, Equifax, Experian, and TransUnion, who are mandated by federal law to provide you with a free credit report each year (via AnnualCreditReport.com) the background check companies are not obligated to sell you a copy of their file on you.
For a brief moment John seems optimistic when he mentions a settlement agreement which was reached last year by credit reporting agencies. In this agreement they pledged to improve their dispute resolution process. Then John returns to reality and urges you not to be fooled. The credit reporting agencies have claimed for decades that they are always improving their accuracy. And, for 25 years now news stories have had a similar tone. Year after year, study after study finds serious errors in credit reports. Misleadingly, the credit reporting agencies show complacency by touting their own study which confirms the accuracy of credit reports at 95%. Considering they hold records for more than 200 million consumers, they are gleefully admitting that 10 million people have inaccuracies on their credit reports.