Queried a credit report error? You're in a 4% minority

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But, according to Equifax, less than 4% of their customers raise a query about the information on their file.

Even fewer - just 0.01% - apply to the agency to have an error corrected.

All of which, as an indication that the information one of the UK's biggest credit reference agencies holds is largely accurate, sounds great for consumers.

Except that credit reports are big business.

According to reference agency Callcredit, which recently launched Noddle credit reports, Britons accidentally spent £22 million on credit report free trials that turned into costly monthly subscriptions.

In the 12 months to November 2010, orders for Equifax's credit data soared by 185%.

Even just getting a new statutory report - a 'snapshot' of the information the agency holds on one day - is £2 a pop.

Time to rethink?

So is checking credit report perhaps not quite the essential part of the consumer arsenal we thought it was?

We asked David Black a Defaqto Insight Analyst for Banking and a frequent advocate of the 'check and correct' mantra.

He pointed out that some credit report errors don't need to be queried with the agency.

"It is worth people checking their credit file periodically to ensure there aren't any mistakes... being linked to an ex partner with whom they no longer have any financial links, for example."

In that case, there'd be no need to flag up the problem - it'd be easily solved by closing the out of date joint account.

But, even when errors are corrected, there's some evidence that they don't make as big a difference as you might think.

A recent study carried out in the US by the Policy and Economic Research Council, for example, found that, where reports were corrected by agencies, less than 1% of consumers experienced a 'meaningful increase' in score.

Point increases of 25 or more - using the Vantage Score credit score system which grades reports out of 990 - were judged meaningful since they could allow consumers to get a better credit card or loan than they could have with the error.

Of course, as the authors point out, in a tough credit environment every point counts and in the UK, where there aren't recognised 'scores' like FICO and vantage, the advantage in terms of repairing a credit report is even harder to quantify.

Error rates

It's also worth noting that other studies, albeit from the US, have found far higher indicators of errors in credit reports.

A recent study carried out by the Policy and Economic Research Council, for example, found potential errors in 19.2% of credit reports.

A 2004 study carried out by the US Public Interest Research Group (PIRG), a consumer advocacy group, found that one in four credit reports contained errors serious enough to lead to a rejected application.

54% had incorrect personal information, PIRG said, and an amazing 22% had the same mortgage or loan listed twice.

Application fraud

Checking credit reports is about more than checking up on the reference agency, of course.

"Aside from incorrect information or details that need updating, checking their file may also alert [consumers] that someone is attempting to fraudulently use their identity," Black told us.

Fraud statistics confirm that application fraud, attempting to use another person's details to apply for credit, is on the increase.

However, it seems likely that the majority of those who apply to check their credit reports do so because they're concerned about credit worthiness, not fraud.

Equifax researched those who requested £2 statutory credit reports, 12% said that receiving a rejected credit application had roused their interest and 28% simply wanted to get a better hold on their finances or had heard about credit checks in the press.

"People are struggling to gain credit and need to keep a close eye on their accounts to win lenders over," Neil Munroe, Equifax's External Affairs Director said at the time.

In light of these figures, however, we might have cause to reflect on the veracity of that claim.