It turns out that a comically-large number (26%) of consumer credit reports may have errors. However, 95% of those with errors do not need to worry about them, because those errors do not affect their “credit risk tier.” Or, conversely, only 5% of the consumers with errors on their credit reports were “significant enough” that the consumers affected (about 10 million) might have been denied credit or paid more for it.
Which means there is a good chance that you have errors on at least one of your credit reports (which you should obviously fix), although they probably do not affect your credit.
Of course, being denied for credit or paying more for it are only two consequences of credit reporting errors. Many more people experience other consequences, like incessant calls from debt collectors looking for someone else.
Here is the meat of the findings:
Overall, we find that 26% of the 1,001 participants in the study identified at least one potentially material error on at least one of their three credit reports. Although 206 consumers (21% of the participants) had a modification to a least one of their credit reports after the dispute process, only 129 consumers (13% of participants) experienced a change in their credit score as a result of these modifications. Each affected participant may have as many as three score changes. Of the 129 consumers with any score change, the maximum changes in score for over half of the consumers were less than 20 points. For 5.2% of the consumers, the resulting increase in score was such that their credit risk tier decreased and thus the consumer may be more likely to be offered a lower auto loan interest rate.
It is cold comfort that most of the errors riddling the credit-rating system relied on by the consumer lending industry “don’t matter.”