Like many of you, The Watchdog recently shopped for lower credit card rates. But I ran into an unexpected problem.

I got rejected for a new credit card.

Not because of my credit score. Instead, I was rejected because I hadn’t bought anything on credit since 2003.

Only that’s not true.

As I first reported in the Aug. 7 Fort Worth Star-Telegram,  a credit card company told me to take a hike because I had “insufficient credit history.” The company learned this from Equifax, one of the three major credit bureaus.

When I protested that I have a mortgage, have made regular car payments and pay regularly on other credit accounts, the company told me to take it up with Equifax.

So I ordered my credit report from Equifax and braced myself. As a victim of identity theft in December, I’m not surprised by anything.

Sure enough, the Equifax report showed that I had stopped engaging in any financial activity whatsoever after 2003. Ridiculous.

Mine is what a credit report must look like for someone who dies, goes to prison, or swears off credit forever and now lives under a bridge somewhere.

Whatever the problem, until it was fixed, I couldn’t open a new credit line with any borrower who relies on Equifax for information. (The two other major credit bureaus, TransUnion and Experian, did have accurate information about me.)

I’m not alone.

Consumer groups say credit reports are rife with inaccuracies, and these mistakes are hard to correct.

“When consumers have a problem with credit reporting agencies, good luck getting it fixed,” said Ira Reingold of the National Association of Consumer Advocates.

The reason, according to a report by the National Consumer Law Center: “Workers [for credit bureaus] don’t examine documents, contact consumers by phone or e-mail, or exercise any form of human discretion in resolving disputes.”

The law requires credit bureaus to provide the maximum level of accuracy for consumers, but that doesn’t always happen, Reingold says. Consumers sometimes have to sue the bureaus to clean up their reports.

What is the accuracy rate? Nobody knows. The leader of the trade association for credit bureaus, the Consumer Data Industry Association, told Congress two years ago that the industry has about a 2 percent error rate.

The National Consumer Law Center says the inaccuracy rate could be as high as 25 percent.

Bad information hurts people. Credit reports are widely used to check a consumer’s eligibility for credit, employment, insurance and rental housing. Errors in a consumer’s report can result in a denial of those benefits or higher costs, the Federal Trade Commission says.

A new FTC rule, announced last month, will require companies that provide information to credit bureaus to investigate complaints about incorrect information. The rule goes into effect in July 2010. Until then, credit bureaus are supposed to investigate.

A pilot study conducted by the federal government showed that most consumers who found errors were able to get them fixed, says Rebecca Kuehn, assistant director for the FTC’s Division of Privacy and Identity Protection.

The FTC is going to sponsor another study and, ultimately, make recommendations to Congress about how to ensure greater accuracy, she told me.

Rather than contact Equifax myself, I decided to test the identity theft protection service I had hired after my ID theft problem last year. Debix.com promises to restore your credit in the event of any problems. The Austin-based company charges $9.95 a month and has 400,000 customers.

“We’ve never seen anything like this before,” Debix Vice President Julie Ferguson said of my case. Paul Rendsland, a licensed private investigator with Debix, was assigned to my case. He collected my paperwork and sent it to Equifax. But the problem wasn’t resolved immediately, so Debix stepped it up.

“We have a good relationship with all three credit bureaus,” Ferguson said. “So we called one of the executives at Equifax and asked them to call you.”

Dinah Watson of Equifax’s consumer affairs office called me and said she fixed the problem. When I asked her what happened, she explained that I had used my full middle name on some credit applications and only my middle initial on others. Equifax, she said, split my credit history into multiple files and didn’t provide all of them to the credit card company. She made it sound like it was my fault.

That sounded peculiar. What about my Social Security number? And my address? My date of birth?

“That’s not a good explanation,” Atlanta lawyer Steven H. Koval said when I told him about it. Koval sued Equifax on behalf of a client who spent two years unsuccessfully trying to correct her credit report.

Jennifer Costello, an Equifax spokeswoman, later told me that customers should contact the credit bureau and work to resolve problems. Equifax is sending me a credit report and my credit score as a consolation.

When that report arrives, I’m going to hunt for more errors.

Action plan

Order a free credit report each year from annualcreditreport.com.

When errors are found, request an investigation by the credit bureau in writing – not by phone or online. Send along documentation by certified mail, return receipt requested.

Notify the company that furnished the incorrect information as well.

If unsuccessful, consider hiring a lawyer who specializes in credit report errors. Go to www.naca.net to find them.

Learn your rights by reading the Fair Credit Reporting Act.