WASHINGTON–A relatively new trade group for consumer credit professionals is saying that while it’s good news consumer borrowing is surging, the bad news is “millions of Americans” are going to discover errors in their credit reports and are going to be denied access to credit.
As CUToday.info reported here, the Fed reported consumer credit outstanding increased at a rate of 10% in May (seasonally adjusted), including an 11.4% increase for revolving credit and a 9.5% increase for non-revolving credit. Moreover, credit unions' portfolio of consumer credit was up 5.1% from a year earlier, compared to a 3.8% rise across all types of credit holders.
“After an extremely difficult and unprecedented year, Americans are ready to start the next chapter of their lives—buying a new car or house, financing a long-delayed vacation, or starting a business,” stated the American Association of Consumer Credit Professionals (AACCP). “But as Americans apply for home loans, new credit cards, and other forms of credit, many will discover for the first time that there are errors on one or more of their credit reports. According to studies by the Federal Trade Commission, an estimated one in five Americans has an error on one of their credit reports. These errors can have a big impact on consumers and the economy as a whole by unfairly reducing a consumer’s credit score, unfairly denying access to hard-working Americans to affordable mortgages, car loans, and other credit products.
‘Chronic Flaws’
“These chronic flaws are not felt evenly across society—studies have found that moderate to low-income Americans and minorities are disproportionately impacted by credit report errors,” the organization continued.
The AACCP said its members, which it said include the country’s largest credit repair organizations, believe consumers have a right to a credit report that is accurate, fair, and backed by evidence.
“Unfortunately, the credit reporting system is complex, and many consumers are unaware of their rights or how to vindicate them,” the AACCP stated. “Worse yet, when they do try and correct credit report errors on their own, many consumers have difficulty navigating the process—leading to as many as half of all disputes being abandoned before completion.
‘Unfairly Denied Access’
Liz Shrum, AACCP senior advisor added, “After a long and terrible year, it’s great news that American consumers are resuming the kinds of activity that drives the U.S. economy. But long experience tells us that too many of these hard-working Americans will be unfairly denied access to or forced to pay more for credit products because of errors in their credit reports and the complex dispute process.”