Home > Uncategorized > Beware the Credit Reports You’ve Never Heard Of?

Beware the Credit Reports You’ve Never Heard Of?

November 30, 2012

Bloomberg Businessweek has an article up today about how you should Beware the Credit Reports You’ve Never Heard Of.  What are those reports?  Essentially, reports from an consumer reporting agency other than the “big three” credit reporters: Experian, Equifax, and Trans Union.

I write to make just one point about the article.  Its author, Karen Weise, cites Persis Yu of the National Consumer Law Center for the proposition that criminal background reports are “riddled with errors.”  You see claims like this a lot, and they almost always turn out to be unsupported.  That’s the case here.  Let me explain:

First, the National Consumer Law Center is, per its own website, an advocacy organization:  it advocates for consumers and against businesses.  That’s fine; I’m an advocate too, and I respect advocacy.  But it’s important to note – which Ms. Weise never does – that the NCLC is biased against the consumer reporting industry.  It’s not a neutral observer.  It wants the government and consumers to hold the industry’s feet to the fire.  So it’s not a neutral source for whether or not criminal background reports are “riddled with errors.”

Second, Persis Yu’s report never claims that criminal background reports are “riddled with errors.”  To make a claim like that, you would have to look at 10, 100, or 1000 criminal background reports, compare them to the actual criminal records of the persons in question, and then determine which of the reports had errors.  It would probably help to obtain some reports from a wide variety of report providers.  If a certain percentage of all of these reports had errors – and I don’t claim to know what that percentage would be, but I think it would have to be high – you might be able to say that these reports generally are “riddled with errors.”

Ms. Yu doesn’t do anything like this in her report.  Instead, she identifies a few mistakes that a criminal background reporter might make in the course of creating a report, and then points to at least one example of a reporter that made such a mistake.  She then says that reporters “routinely make mistakes” because “[a]dvocates from across the country report that they repeatedly see reports” that contain them.  But she doesn’t say who the advocates are, or how many reports they saw, or how many mistakes each caught.  If a hypothetical advocate sees 100 hypothetical reports and sees the same mistake three times, then I suppose that advocate has “repeatedly seen reports” that made a mistake.  But I don’t think we would conclude that the reports were “riddled with errors”:  only 3% of them contained mistakes.

I don’t fault Ms. Weise or Ms. Yu for bringing the some issues in the criminal background reporting industry to the world’s attention.  But I don’t think it’s fair to say that we need to “beware” these reports or to assume that they are “riddled with errors.”  I’m not aware of any comprehensive study, done by a neutral organization, which has tried to figure out how common or uncommon errors in criminal background reports might be.  To the extent that Ms. Weise suggests that Ms. Yu’s report is such a study, I think she’s mistaken.

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