By Dan Smith, President and CEO, Consumer Data Industry Association
A credit report provides detailed information about a person’s financial obligations and how those obligations are managed, including payment history on loans and the status of accounts. It plays a vital role in building a full financial picture of each American consumer. These files are far from simple documents. They track current and past accounts, payment history, balances, credit limits and collections activity, and they change every time a lender reports something new. The nationwide consumer reporting agencies (NCRAs) keep those reports accurate across billions of updates, and that takes a great deal of work and sustained investment.
Most of that work happens out of view.
Our members receive and process information from thousands of furnishers, matching each record to the right consumer, updating files as new data arrives and investigating disputes when a consumer questions something. Accuracy matters. A record matched to the wrong person, or an update that never posts, changes what a lender sees. This constant updating happens in the background, for every American, for as long as they have had credit. Consumers rarely see it until they apply for credit, shop for a car or apply for a mortgage.
The Fair Credit Reporting Act (FCRA) requires consumer reporting agencies to follow reasonable procedures to assure the maximum possible accuracy of the information in consumer reports, and it requires lenders and other furnishers to maintain policies protecting the accuracy and integrity of what they send. Our members treat that standard as a starting point.
Much of what consumer reporting agencies do goes further than the law requires, and it is designed with consumers in mind. Whereas the FCRA entitles every consumer to one free report a year from each agency, our goal is to help educate consumers and provide access to their information whenever they need it. Equifax, Experian and TransUnion first offered free weekly reports to help people through the financial strain of the COVID-19 pandemic, and they have since made that offer permanent through AnnualCreditReport.com, where a consumer can pull 52 reports a year.. Additionally, each agency has options for consumers to regularly access their credit reports, if desired. A consumer preparing for a major purchase can review all three reports well ahead of time, spot anything that looks wrong and dispute it through the various methods that each agency offers.
The NCRAs and data furnishers rely on the Metro 2® Format, a common reporting standard that helps information arrive complete and consistent before it ever reaches a file. They use e-OSCAR, an industry-wide, automated system that reduces the time it takes for consumer disputes to be processed. These industry improvements are made to help consumers and they exist because accurate files serve everyone better.
Consumer reporting agencies make continued investments in data-matching technology, security and personnel who are highly trained in a very regulated industry. As data volumes grow, fraud tactics change and consumers expect faster answers. Accuracy is the product of that ongoing work and investment.
The work our members do matters because lenders depend on credit reports to understand how an applicant has managed credit over time. Reliable information helps them evaluate risk consistently and extend credit responsibly, and it helps consumers receive decisions that reflect the history they have actually built. Multiplied across every mortgage, auto loan and credit card approved each day, that reliability supports the safety and soundness of the credit system at the center of the nation’s economy.
An accurate credit report is never finished. It is maintained one update at a time by companies that choose to do more than the law asks, because consumers, lenders and the broader economy are counting on the result.