Which? raises alarm over credit report confusion

Consumer group Which? has raised concerns about the credit reporting system in the UK, revealing that many people are left feeling out of pocket and confused.

Their survey of 4,000 people found that 32% had discovered errors in their credit reports. These inaccuracies can severely impact individuals' financial lives, including their ability to secure loans or even buy a home.

The survey shows that correcting these mistakes isn’t as straightforward as it should be. Typically, consumers notify credit reporting agencies (CRAs), who are expected to handle disputes.

But many respondents reported needing to do the heavy lifting themselves to resolve issues. With three main CRAs – Equifax, Experian, and TransUnion – confusion is rampant, as only 35% of respondents knew that there are different versions of credit reports.

Fighting with the system

One respondent spent two years battling a credit report error that falsely claimed he defaulted on a payment to O2, a company he’d never had an account with.

Despite several attempts to fix the issue, including escalating his case to the Financial Ombudsman Service, the wrong entry kept resurfacing, which affected his credit score.

Another respondent experienced a similar situation when he discovered an error on his report while helping a friend. After reaching out to British Gas, they initially refused to correct the mistake, but after Which? intervened, they finally acknowledged the mistake and issued a goodwill payment.

Calls for reform

Which? is calling for urgent reforms to the credit reporting system to enhance transparency and accountability. They say the current system is not only confusing but can lead to significant financial consequences for those affected.

As Sam Richardson, Deputy Editor of Which? Money, puts it:

“The credit reporting system has long been shrouded in mystery.”

The Financial Conduct Authority is launching a study into these issues, with the aim to make the system clearer to understand and to use.