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John Oliver explains how credit reports can screw you over

On Sunday's Last Week Tonight, John Oliver looked at something that affects practically every adult in the US: credit reports. As Oliver put it, they are "the basis for the single most important three-digit number in your whole life."

There's no doubt your credit report is really important. "It's not just banks deciding whether to lend you money," Oliver said. "It's also landlords deciding whether to rent you an apartment. Insurers setting your rates. And even employers using it to decide whether or not to hire you."

But Oliver argued that there are huge problems with credit reports. For one, about half of all overdue debt on credit reports comes from medical expenses, according a 2014 report from the Consumer Financial Protection Bureau. "It seems unfair to judge someone for that," Oliver said. "No one chooses to be sick."

What's worse, credit reports can contain a lot of errors: A 2013 study from the Federal Trade Commission found that 25 percent of consumers' credit reports had errors and about 5 percent had serious errors that could result in less favorable terms for loans. As Oliver pointed out, these errors can vary — from credit companies mistaking a person for a terrorist to these agencies thinking someone who's alive is actually dead.

These errors aren't even a big secret. Oliver rolled clips of news reports about errors on credit reports going back to 1991. "The problem is this whole industry seems uncomfortably complacent," he said, referencing a report in which an industry trade group claimed that the FTC study "showed that 95 percent of consumers are unaffected by errors in their credit report."

"When you are holding records for more than 200 million individuals, that 5 percent error rate affects 10 million people," Oliver said. "They're basically saying, 'Great news, everyone: We only fucked up a group equivalent to the entire population of Sweden!'"

In response, Oliver decided to force credit companies to deal with the exact same problems they force people to deal with. So he started three companies that sound quite similar to the big three credit companies (Equifax, Experian, and TransUnion): EquiFacks, Experianne, and TramsOnion.

But there's a catch: All three of these new companies do terrible things that have nothing to do with credit reports. Experianne, for example, "specializes in whispering passages from 'Mein Kampf' into the ears of babies, without the permission of parents or the babies themselves."

"It would clearly be an absolute disaster for the credit agencies if they were mistaken for any of these companies," Oliver said. "But don't worry. I'm sure that won't happen 95 percent of the time. And apparently, that's good enough. Right?"

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