Last week, the Consumer Financial Protection Bureau (CFPB) issued a report outlining the regulatory agency’s effort to address issues within the credit reporting market. Some of those efforts include correcting data accuracy at credit reporting companies, repairing the broken dispute procedures, and cleaning up certain information being reported by furnishers. Still, the main takeaway is this: the information being submitted by furnishers (banks and non-banks alike) and maintained by credit reporting agencies (companies like Equifax, Experian, and Transunion) is not always accurate.
Inaccurate Credit Reports Harm Consumers
This has serious credit implications for consumers. Reports sold by three of the largest consumer reporting agencies mentioned above are used to determine both credit eligibility and rates consumers pay for that credit. When furnishers provide inaccurate information, the reports issued by the credit reporting agency are inaccurate, harming the consumer in the market for credit.
Even if a consumer dutifully checks his or her credit and finds incorrect information, the problems don’t just end there. According to the CFPB, which has handled almost 200,000 credit reporting complaints since its oversight began in 2012, consumers consistently complain that even when a dispute is reported, nothing ever changes on their report. Never mind the fact that federal law requires consumer reporting agencies to either correct or delete the disputed item.
CFPB Focus on Quality Control
The good news? Improvements are being made according to CFPB Director Richard Corday. Take for instance the changes the CFPB mandated on quality control. Credit reporting agencies have now instituted tests that better indicate whether reports are issued for the wrong consumer and whether reports contain incorrectly labeled files. That is just one of two other main steps to help drain the murky swamp that exists between the furnishers and credit reporting agencies. The other two involve improved processes for dispute investigations that coincide with increased resources to help facilitate those investigations. While improvements are a good thing for consumers, Mr. Corday made it clear that more work needs to be done.
For all of us consumers out there, let’s hope progress continues to be made.