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with a retailer who subsequently outsourced their lending to GECC and the consumer never knew of that relationship or isn't aware that some retailers outsource their lending. In this case, the consumer will be adamant that the account is incorrect, but, in fact, it is accurate. Once they are made aware of the retailer's name (i.e. Home Depot for example), they acknowledge they do have a Home Depot account. The file was accurate.

(4) A consumer sees a previous address listed as the current address and vice versa. He cannot understand how the credit bureau could make that mistake. However, the consumer had failed to notify some of his credit grantors about the previous move, so some credit grantors are still reporting the old address as current. This hasn't been an issue for the consumer because the mail from those credit grantors is getting forwarded or the account is so inactive the credit grantors do not need to send them a billing statement very often.

(5) A consumer sees his or her name listed with an unrecognizable combination of personal initials they don't remember using. The consumer's inclination is to believe the credit bureau is responsible for this. However, the fact is that our members' systems are incapable of making up a name. That particular name has transmitted it to us by the credit grantor. Either the consumer previously used that name with a credit grantor in the past or the credit grantor transmitted the

erroneous name.

(6) Consumers also often find that employment data is not current on their file disclosures. This is due to the fact that many lenders do not report employment data any longer. Nonetheless, the FCRA requires that a consumer reporting agency disclose “all information in the file at the time of the request" and this includes dated employment data.

The previous examples have no bearing on the lender's risk decision. Yet, the consumer has questions about this data and regards these as "errors" by the credit reporting agency.

Accuracy and Divorce: One very significant challenge for CDIA's members is the problem lenders and consumer reporting agencies have with how credit obligations are handled incorrectly by divorce courts. A divorce decree does not supersede an original contract with a creditor and does not release a consumer from his or her legal responsibility on those accounts entered into jointly with the former spouse.

A consumer will see an item on his or her report and call to dispute the accuracy of it because they feel the divorce court adjudicated it. Despite the explanation that the debt is still owed, the consumer will argue that his or her lawyer did not advise them at the time of her divorce that this would be the case. We explain to the consumer that it is ultimately his or her responsibility to contact creditors and seek a binding legal release of the debt obligations that have been incurred.

Accuracy and Expectations of Immediacy: Another very significant challenge is the perception by consumers that their credit reports should and can be updated nearly instantaneously. For example, consumers may review their credit reports and while data is accurate as of the date reported, they believe that recent payments should already be reflected showing a lower outstanding balance. A majority of data in the nationwide credit reporting systems is updated on a thirty-day cycle and this timing correlates with the thirty-day billing cycles for many types of

contractually prescribed credit payments to creditors. CDIA believes that a great many disputes are being driven by a desire to update information, which is otherwise accurate.

Accuracy and Misunderstandings About the Law: Often enough our members report that consumers believe that when an account is delinquent and subsequently paid, that any negative information about the missed payments will be expunged from the record. Similarly, consumers often believe that an item placed for collection should be expunged once paid. In fact the law recognized that it is important for creditors to know when the account was paid and to also maintain a history of the timeliness of past payments for purposes of safety and soundness. Thus, the law permits adverse information to remain on the file, but for no more than seven years.

We strongly believe that the context we have just provided is essential even as we try to review "hard" data that quantifies the accuracy of the credit reporting system. Anecdotes can be based on problems that are real and in some cases are driven by perceptions or misconceptions about how the system does or should work and even how other laws work. Finally, before we move to a review of sets of data, we caution against making the term "accuracy" synonymous with "consequential." Some inaccuracies are inconsequential to the consumer, such as a missing middle initial, and some inaccuracies may be very consequential, such as an account on a

consumer's file which isn't his or hers.

Accuracy - What data is available regarding reviews of files?

CDIA's members have, in working with the General Accounting Office and in preparation for our testimony, developed or identified constructive sets of data that help us try and understand accuracy both from the perspective of the consumer's experience and also from the viewpoint of the marketplace, itself.

Let me restate a key statistic that provides context for some of the data to follow. CDIA's members estimate that there are no less than two billion consumer credit reports sold annually in

this country. Keep in mind that as these reports are being used to make decisions, every consumer who is the recipient of an adverse action notice can order his or her file disclosure and then exercise all other rights under the law that apply, including the right to dispute and have information corrected. Today, our members are issuing 16 million disclosures to consumers or eight tenths (0.8%) of one percent of the two billion files sold. To better understand who these 16 million consumers really are, the following chart shows us the breakdown of which consumers ordered their files for which reasons:

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Think of it this way; 16 million consumers are reviewing their files each year. Equally

important, two billion consumer reports are being evaluated by lenders, whose ultimate goal is to

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enjoy the widest range of loan products likely offered in any country in the world.

In fact today, consumers today are enjoying some of the best mortgage interest rates ever and they can be assured of continued access to an extraordinarily competitive mortgage-lending marketplace through the reauthorization of the uniform national standards under FCRA. A national consumer credit reporting system which serves as the information infrastructure for our secondary markets can, reduce the average consumer's interest rate by two full percentage points.5

Consumers by the millions review their files every year.

Logically we should try to better understand what a review of their file meant to these 16 million consumers who request their files each year. Preliminary findings estimate that less than fifty percent of consumers who receive their file, which contains a toll-free number with access to live personnel, ever contact our members again. In fact, consider the following subpopulations of consumers and the rates of contact to further illustrate this point. In these two subpopulations of consumers who received their files, the reason was not associated with an adverse action notice.

Data Set 1 - Consumers Who Suspect Fraud

CDIA members have been proactive in providing a range of fraud assistance services to
consumers who suspect they have or may become a victim of fraud. These consumers
order their files and are provided with toll free numbers by which to contact live
personnel. In this set of data, you'll find that the rate of contact relative to the number of
files issued is quite low and we think this is significant since it is quite likely that a
consumer who is worried about fraud is more likely to scrutinize a file with the clichéd
"fine tooth comb" and, hence, more likely to find data about which they need further
clarification or which should be disputed. Annualize these data and you have 1.2 million
consumers reviewing their files with a right to dispute any information and any time. Out
of this 1.2 million about 120,000 take the time to call back on the toll-free lines.

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Kitchenman, Walter, U.S. Credit Reporting: Perceived Benefits Outweigh Privacy Concerns, The Tower Group, 1998, pages 7-8.


Note that the number of consumers could be less than 16 million since some consumers may order more than one file in a year and the 16 million is a count of the aggregate number of disclosures issued by all of the nationwide consumer credit reporting systems.

Average number of disclosures due to fraud per

Average number of contacts per month from this
same population. A contact cannot be equated with
a dispute or follow up question concerning any
number of issues.


10,000 (10%)

Data Set 2-Consumers Who Reviewed Files Due to Notices About File Activity

In this set of data, gathered over a twenty-four-month period, consumers received a notice that their files had one of two events occur in the previous twelve-month period: (1) a certain level inquiry activity; or (2) additional adverse information reported. Here the consumer was given a reason for ordering a file and after a review only 9000 consumers out of the 180.000 ever called back with a question.

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These two sets of data are directly responsive to the various reports issued over the years by the U.S.Public Interest Research Group and others about the accuracy of credit reports. These reports studied small populations of files also using US Pirg employees as the “reviewers". Some of these reports used as few as 50 consumers. Contrast this with the data showing hundreds of thousands of consumers order their files and between 90% and 95% appear to have had no problem with their files whatsoever.

CDIA also took a look at how the marketplace responds to accuracy of files. This particular set of data is important because it is reflective of the two billion reports sold annually by the nation's largest credit reporting systems. It is through this set of data that we can now begin to understand one potential "driver" for consumers who review their files and do have a dispute.

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