Credit Report Accuracy and Access to Credit

Abstract

Data that credit-reporting agencies maintain on consumers' credit-related experiences play a central role in U.S. credit markets. Analysts widely agree that the data enable these markets to function more efficiently and at lower cost than would otherwise be possible. Despite the great benefits of the current system, however, some analysts have raised concerns about the accuracy, timeliness, completeness, and consistency of consumer credit records and about the effects of data problems on the availability and cost of credit. In this article, the authors expand on the available research by quantifying the effects of credit record limitations on the access to credit. Using the credit records of a nationally representative sample of individuals, the authors examine the possible effects of data problems on consumers by estimating the changes in consumers' credit history scores that would result from "correcting" the problems in their credit records. Moreover, the authors report results for consumer groups segmented by strength of credit history (credit history score range), depth of credit history (number of credit accounts in a credit record), and selected demographic characteristics.