Sophisticated credit-scoring technology has made it easier for lenders to measure a borrower’s risk, fueling the growth of the subprime market. Unfortunately, the information used to calculate credit scores is often inaccurate, incomplete or fraudulent, consumer groups say.
The U.S. Public Interest Research Group recently asked members in 30 states to review their credit reports for accuracy. The result: 25% of the 200 reports surveyed contained mistakes that could lead to denial of credit or higher interest rates, says Ed Mierzwinski, consumer director for the group.
Credit-reporting agencies said the results were exaggerated and questioned the consumer group’s definition of serious errors. But given the enormous amount of information processed by credit-reporting agencies, some mistakes are inevitable.
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