Mistakes on credit reports could wrongly be contributing to millions of British consumers being refused credit or unfairly missing out on the best rates for financial products, according to new research from uSwitch.com, the price comparison and switching service.
38% of people who checked their credit report in the last two years have discovered mistakes after requesting access to them, representing five million consumers, according to new research from uSwitch.com.
However, the price comparison site believes this is just the tip of the iceberg, as over 15 million consumers have never even checked their credit report, suggesting millions more could be at risk from undiscovered credit report inaccuracies.
The most common errors found by those that checked include: the wrong products, such as credit cards, listed (39%); the wrong address (23%); and even the wrong name of the bank or company providing credit listed (18%) on the report.
The research shows that 12 million consumers (25%) have been turned down for credit, or have not received the rate that they applied for. Many of those who have been rejected often turn to more expensive forms of credit, with over a quarter (26%) forced to borrow from payday lenders and one in five (21%) using pawn shops or cash for gold services. A fifth (20%) take out a credit card with a higher interest rate and 19% turn to unsecured loans with a higher interest rate.
This is at a time when personal debt is costing the British economy £8 billion annually, through the damage it causes to family life, employment prospects, mental and physical health as well as the cost to state services.
=The research reveals that when consumers are turned down for financial credit, they are unaware about how these critical decisions are made – only 38% said they were told by the lender the exact reasons why they were refused without having to ask. Furthermore, 34% of those refused credit were given no explanation at all.
David Mann, head of money at uSwitch.com, said: “Credit report errors have a dramatic effect on our ability to access the best financial deals. If your report contains errors, you can quickly find yourself rejected for credit. As a result, the research shows many consumers are turning to more costly forms of obtaining credit and can end up with debt that’s difficult to manage.
“We perhaps place too much blind faith in credit reference agencies to maintain accurate data about us, when mistakes are almost inevitable. But the process to correct these errors is lengthy and complicated. The problem is further compounded by there being multiple credit agencies so the incorrect information held about us could be included in more than one report. This makes it harder for consumers to know where to turn.
That’s why we’ve launched ‘It’s My Report’, to make credit reporting free, fairer, and fit for purpose. We want all consumers to regain control of their own information and take action where needed to ensure they always get the best possible deal.”