“I’ve been in constant dispute with the credit bureaus for almost a year now and have yet to get … the inaccurate accounts on my credit report removed. I feel like I am being taken advantage of and have been throughout this whole situation. I’ve been getting ignored for months on top of months and it is leaving me no other choice but to take these matters to court if the issue doesn’t get resolved.”—so wrote a consumer to the Consumer Finance Protection Bureau (CFPB) in June of last year reported by the CFPB in a January 3, 2023 report.
Far from the exception, this consumer reflects ongoing problems with and failures of credit reporting. The credit bureaus, Experian, Transunion, and Equifax receive more complaints than any other industry. It has gotten worse. In 2022, 604, 221 complaints were directed to the CFPB, compared to 307,658 in 2021, an increase of 61 percent year over year. They’re all three guilty. Experian’s complaints jumped 334 percent, Transunion’s 183 percent, and Equifax 24 percent year over year.
Not much, if anything, ever gets resolved. Fewer than two percent of the complaints found relief in 2021, reports the CFPB. Ed Mierzwinski, senior director of the U.S. Public Interest Research Group, said the credit bureaus “have never considered consumers as their customers. They’ve always considered consumers as a nuisance.”
“America’s credit reporting oligopoly has little incentive to treat consumers fairly when their credit reports have errors,” CFPB Director Rohit Chopra wrote in a news release. The credit bureaus make money three ways: selling data to lenders, selling individual credit reports to lenders and individuals, and selling information about individuals consumers’ credit worthiness to marketers who sell such things as credit cards to consumers. As a result, they have little incentive to correct errors because dealing with consumer complaints just costs them money.
The Consumer Data Industry Association (CDIA) replying to the CFPB complaint wrote, “We are reviewing the CFPB report in detail. We agree that responding to legitimate complaints and getting credit reports right are paramount.”
Wait a minute, he said “legitimate consumer complaints.” What exactly to they consider legitimate complaints. For one thing, if someone uses a third-party, such as a credit repair company, to deal with an issue, the credit bureaus think of it as an illegitimate complaint.
Chi Chi Wu, staff attorney at the National Consumer Law Center, said, “If you’re using a credit repair, there’s a good chance the bureaus aren’t going to deal with your dispute at all.” The bureaus’ excuse, “Certain credit repair companies falsely promise consumers they can remove negative, but accurate, information from their credit report and drive activity which inflates complaint numbers and undermines the process of addressing legitimate requests,” the association wrote in an email. A valid point, but that throws all the credit-repair companies into the same vat of crookedness and gives the credit bureaus an excuse to ignore inaccuracies on credit reports.
Still, they promised to “do better.” The bureaus created “online dispute centers” to address their failings, reminiscent of appointing a committee to solve a problem: hold lots of meetings, talk a lot, make lots of plans, make lots of promises, and do nothing substantive.
They say they have begun issuing “more substantive responses” because of the CFPB reports and complaints. What “more substantive” means exactly is subject to who is saying it. The credit bureaus say they’re doing much better while those people stuck in complaint purgatory see no difference.
The three credit bureaus keep credit records on some 200 million consumers. The Brookings Institute reported September 28, 2017 that one in five reports contained a “potentially material error.” Assuming that figure is still accurate, that means of the 200 million credit files, 40 million of them contain errors.
What kinds of errors do you find on credit reports? Many you can spot easily, just by reading your credit report.
Incorrect personal information may be easiest. You name is misspelled or someone with a similar name appears on your credit report. It could also be an incorrect address, birthdate, or Social Security Number.
Incorrect accounts resulting from identity theft resulted in 167,000 people reporting fraudulent credit cards with their information on them. Identity theft can come from hacking or outright theft of personal data.
An authorized user might be shown as the account holder. That would be, for example, when a son or daughter has a card and shows up as the owner.
Other errors could be closed accounts showing as open, duplicate accounts maybe with different names, inaccurate payment history reporting paid off debts showing as late or delinquent, incorrect date of the last payment, the date the account opened, or date of first delinquency (if any), and outdated balance or credit limit information.
When someone complains about an inaccuracy such as an incorrect charge, the bureaus contact the creditor who has 30 day to verify the reported charge. Sometimes they confirm that the charge is legitimate despite the fact that it is paid off. That means the inaccurate record stays on the credit report. Then the consumer has to deal with the creditor to have the error removed. In many cases, good luck with that.
Even worse, the complaint actually gets the inaccurate data removed from the report. Then when the bureaus install a backup of their data, the error can be migrated right back on the credit report. It might stay corrected on one or two of the bureaus’ records but not on a second or third one’s. The purgatory starts all over again.
Eternal vigilance is all that can save us from credit-report purgatory. Checking credit reports for errors and filing complaints to the CFPB when those errors have not been corrected is about the only way to hope to keep credit reports accurate, albeit at a snail’s pace. Can you trust credit reports? If one in five has errors, how can you? Just like any other statement, verify everything and ask for explanations from applicants.
