Which? Calls For Reform of ‘Broken’ Credit Report System as Errors Hit People’s Pockets

Consumer champion Which? is warning that people are being left out of pocket by a broken credit report system that is “riddled” with errors and lacks transparency and accountability.

Following a nationally representative survey of over 4,000 people, Which? found that 32 per cent of respondents who checked their credit report discovered a mistake. The consumer champion revealed that these errors can have a hugely negative impact on people’s lives if they are turned down for financial products and even wreck dreams of securing a home if they are refused a mortgage.

In theory, most mistakes should be easily corrected, with consumers notifying their credit reporting agency (CRA), which then marks the information as in dispute and queries it with the firm. However, Which? also reveals that most people interviewed said they had to do most of the legwork to amend errors.

There are three versions of credit reports, which are provided by Equifax, Experian, and TransUnion. Each one collects its own data from lenders and open information sources such as the Land Registry and electoral roll. Only 35 per cent correctly said there are three different versions.

If details on credit reports are inaccurate consumers may not find out until it is too late. One in seven (14 per cent) respondents who applied for credit said their application was refused. Among these, 53 per cent said the reason was due to their credit score being too low.

Which?’s survey found that 52 per cent of respondents also thought they would be alerted if a negative entry appeared on their credit report, but this is not always the case. The only way to know if an ‘adverse account’ (a debt or a default) has appeared on your file is to check yourself.

Time for reform

Which? revealed that one of its members spotted a mistake on their credit report, so contacted British Gas, which acknowledged he had no debt with them. However, it separately told Equifax the data was correct and would not amend it. Only after Which? contacted British Gas did it correct the error, apologise for the delay and send the member a goodwill payment.

Of the survey respondents who had checked their credit score or report, 70 per cent did so with only one provider. Most lenders rely on information from only one CRA, but will not tell applicants which one, only adding to the uncertainty.

Following the survey, Which? is calling for reform of the credit report system, to make it simpler to find information and easier to amend mistakes that could stay with consumers for a long time.

Sam Richardson, deputy editor of Which? Money

Sam Richardson, deputy editor of Which? Money, said: “The credit reporting system has long been shrouded in mystery, but as our research reveals, it can have a big impact on those caught up in fixing mistakes.

“We’ve found that many people are left to correct mistakes on their report themselves, despite the onus being on credit reference agencies and lenders to fix errors. Which? wants the system to be made much clearer and simpler, with mistakes easy to rectify.”

The Financial Conduct Authority published a market study into credit reporting in December 2023, setting up a working group to make recommendations on the reform of industry governance arrangements. Which? wants the regulator to take forward recommendations that increase consumer understanding and trust in the system.

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