By Paul T. Lyons
The consumer credit reporting system touches the lives of hundreds of millions of Americans. Indeed, it is difficult for an American consumer to avoid becoming the subject of a credit report. Unless consumers are very wealthy, they will need to access credit to buy a house, attend college, or simply finance everyday purchases through a credit card. Any of these transactions will begin to generate a credit history and enter the consumer into the credit information system. Consumers’ credit histories then follow them throughout their public and economic lives, affecting the availability of credit and the terms on which it is extended for home loans, car loans, credit cards, and other consumer financial products. Credit history may also impact the availability of employment opportunities, insurance policies, and housing. A negative credit evaluation can cause consumers to be excluded from economic and social opportunities. Specifically, about one in twenty consumers are affected by an error that substantially interferes with their ability to access credit, as will be discussed infra in Section I.C. Additionally, while the effects on other consumers might be marginal, they are nevertheless significant, especially when considered in the aggregate. Negative credit histories raise the cost of acquiring money, resulting in greater overall debt burdens for consumers seeking financial products…