Answer (from CFPB and Consumerist): Credit reporting agencies (three of top four) and banks
For the history lovers out there, a Time article provides an almost 200 year history of credit reporting. A few interesting morsels:
- Earliest credit reports were character based: “In 18th-century America, for instance, country storekeepers secured loans by asking well-regarded neighbors to vouch for their character to bankers and merchants. And urban creditors mined far-flung rural acquaintances for rumors and hearsay regarding applicants for credit.”
- Retailers saw benefits of selling on credit and therefore were early pioneers in developing credit histories on their customers: “Eager for these workers’ hard-earned dollars, many retailers—including America’s newfangled department stores and auto industry—extended generous credit lines.”
Answer (from FTC report): About 1 in 4 (25%):
From American Banker:
A widely cited study by the Federal Trade Commission in 2012 found that one in four consumers have potential mistakes on their credit reports. Worse, one in 20 may have errors significant enough to negatively impact how much he or she pays for a loan, or whether credit is provided at all. Given that 220 million Americans are now on file with the bureaus, that’s 11 million consumers with possibly material errors on the reports they will use to buy a house, car or even secure a job.
So, the next time you ask your students to be sure to check their credit report, be sure to let them know the frequency of these errors!
Check out the NGPF lesson on Monitoring Your Credit.
I have been working on a case study to help students understand credit scores. Let me know what you think about my draft. Contact me at firstname.lastname@example.org if you have any comments or just want the answer key:
A Tale of Two Credit Scores: A Case Study
Staring at the two student files on your desk, you know that you only have a few minutes to review them before your afternoon meetings. Your role as peer financial advisor provides you not only with the opportunity to help others but also has deepened your understanding of so many personal finance topics. Both students have come to you with one simple request: teach me how to increase my credit score. As more financial institutions have freely shared credit scores with their customers, you have seen interest in this topic grow. Continue reading
From The Consumerist;
A new survey from Bankrate.com found that more than one-third of American adults – roughly 35% – have never requested their credit reports.
When it comes to not checking credit reports, both millennials and older consumers were the most likely culprits. Nearly 44% of senior citizens (those 65 years of age or older) report they have never checked their credit reports, while 41% of consumers ages 18 to 29 have never reviewed the records.
I am reminded in looking at these statistics that millenials to date have proven to be credit averse. Ask your students to develop a list of the benefits of checking their credit reports at annualcreditreport.com (be sure to let them know that this is a free service. Continue reading