A Victory for Credit-Report Firms

Consumer groups suffered a setback this week when the U.S. Supreme Court refused to consider whether Americans should be able to sue over inaccurate credit reports, even if they haven’t been rejected for a loan or a job.

The high court rejected a request for review of a New York-based federal appeals court’s ruling that unless harmful false information is actually distributed, consumers can’t claim they were harmed by a credit-reporting service’s mistakes.

Consumer groups said the lower-court decision “creates an intolerable Catch-22” that denies Americans the benefit of a federal credit-reporting law unless they take “the futile and in fact self-destructive step of applying for credit and being turned down” even when they know a credit report is wrong.

The high court’s action could help fend off a multitude of lawsuits against America’s credit-reporting industry, which is dominated by TRW Inc., Equifax Inc., and Trans Union Corp.

Credit bureaus maintain about 450 million files on more than 110 million people. The bureaus sell the files to companies that use them to assess candidates for home mortgages, credit cards, jobs, apartment rentals and security clearances. Experts have estimated that almost half the credit files contain some sort of mistake and that about 1 in 5 may have an error that could hurt a consumer’s chances of getting credit.