What is a Consumer Report? When Should You Dispute Yours?

what is a consumer report

Today, it’s of the utmost importance to have a respectable report/record of your life’s transactions to further yourself for tomorrow. What do we mean by this? Almost all business dealings, financial transactions, and applications anyone participates in rely heavily on a record of past dealings.

You cannot apply to colleges without an academic transcript. You cannot apply for a new job without a resume and references. You cannot apply for loans, credit cards, or even housing without an accurate consumer report.

What is a consumer report? A consumer report is a record of your previous activities as a consumer. It is not one “master report” with an overall score but rather different reports from different independent agencies that collectively paint a picture of your consumer history.

Each consumer reporting agency has a different field of focus and specialty. For example, some consumer reporting agencies will focus on credit (most commonly referred to as a credit report). In contrast, others will focus on background screening for employment or tenant history for renting opportunities.

Notable Sectors of Consumer Reports

As previously mentioned, there are multiple market areas of consumer reporting. Credit consumer reporting, employment reporting, and tenant reporting are the most commonly used.

The most talked-about and nationally renowned sector is the financial/credit consumer reporting agencies. There are three primary credit reporting agencies, Equifax, TransUnion, and Experian. These agencies operate independently of each other. Some businesses will look at your credit report from all three, while others will look at only one or two. There’s no way to know in advance which credit report a business will look at. These “big three” credit reporting agencies obtain information from credit card companies, home and auto lenders, and debt collection agencies and place that information on your credit report.

Employment screening agencies will often verify credit history, employment records, salary information, licensing and education, and other personal information. Most employers will ask for permission to run this type of background check. 

Tenant screening reports look for histories such as failure to pay rent or past evictions and often include other information like a criminal background check and a credit check.

Do You Have Credit Reporting Errors That Are Inhibiting Your Life Decisions?

Consult with a Credit Report Lawyer to Learn How to Free Yourself from Reporting Errors!

Why Do Consumer Reports Matter?

The credit card companies do not take your word for it that you’ve turned over a new leaf and have improved your financial habits. A new landlord cannot hope that you have paid rent on time for several years, reliably. A bank needs to know that you won’t default on a mortgage. The need for information is why consumer reports exist in the first place.

What is a consumer report to you? A consumer report is VERY important for you, as a bad consumer report can limit your ability to prosper in many ways. Even though studies have shown that credit reports have an error rate of more than 20%, businesses and lenders argue that consumer reports are the most reliable sources of information for any institution looking into your consumer behavior record. When they provide inaccurate information, it is often mistaken as the absolute truth.

Consumer reports can be thought of as entry tickets for a train ride. You won’t be granted passage on the train if you don’t have a valid ticket, and you’ll be left at the station. Whether you’re looking to sign up for a new credit card, buying a new car, applying for a home loan, or looking to rent an apartment, positive consumer reports are crucial to success with any of these endeavors. 

When Should You Dispute a Consumer Report?

These consumer reporting agencies aren’t perfect. According to the FTC, one in five people have an error on at least one major credit report. Sometimes the data they collect on an individual can be inaccurate and must be remedied. Errors on consumer reports can put harmful marks on an individual’s record and inhibit them from future consumer transactions. And even if the reporting agency doesn’t make an error, victims of identity theft can find errors on their reports due to the crime. That is why there are protections in place for consumers to contest wrong information on their consumer reports. 

If you are experiencing difficulties as a consumer because of wrong information on your consumer report, it’s time to dispute it. The Fair Credit Reporting Act was enacted to protect the information and rights of consumers. Under the act, consumers have the right to obtain their personal file prepared by the reporting agencies. This file disclosure has the same information that could be requested by any credit union or employer and other important data which only CRAs and consumers can see. Consumers have the right to contest inaccuracies on their reports and ensure that the data collected about them is accurate and up-to-date. 

Correcting consumer report errors is not always an easy or straightforward process, which is why many people choose to get help and guidance from a consumer protection lawyer.

At Holland Law Firm, we’ve been helping consumers protect themselves, their reputation, and their future from errors on consumer reports.

If you’re facing unnecessary challenges because of reporting errors, don’t feel helpless, there is a path forward. Your name and your record can be made clean.