Feds: Consumer credit scores should be more readily available

Consumer credit complaints are topped by inaccuracy of information issues

By James Limbach of ConsumerAffairs

Consumers shouldn't have to fight to get access to their credit scores and related content. That's the thinking behind a call by the Consumer Financial Protection Bureau (CFPB) for the nation’s top credit card companies to make such information freely available to their customers.

At the same time, a report released by the CFPB found accuracy issues top the list of credit reporting complaints the it gets from consumers.

“Credit reports and scores can determine the terms of people’s mortgages, whether they qualify for auto loans, or if they are eligible for different credit cards,” said CFPB Director Richard Cordray. “Making consumers’ credit scores freely available on their monthly statement or online makes it easier for them to spot problems with their credit report.”

Everybody has one

Most Americans have a credit file. Credit reports and scores can determine everything from consumer eligibility for credit to the rates consumers pay for credit. Because of the significance of these reports, consumer reporting agencies have been a major focus for the CFPB.

The three biggest credit reporting companies each maintain files on over 200 million consumers. These files are based on information supplied by thousands of providers, also known as data furnishers. As it issued its report, the CFPB warned these furnishers not to avoid investigating consumer disputes.

Availability of information

Fewer than one in five consumers check their credit report in any given year. Without a regular review of their credit report, they may not notice errors in the data or even identity theft. Recently, some credit card companies have made credit scoring information freely and regularly available to their customers on monthly statements or through online access.

CFPB Director Cordray recently sent letters to the nation’s top credit card companies urging them to follow suit by making credit scores and related content freely available to their customers. A regularly available credit score may prompt more Americans to review their credit standing and pull their free annual credit report at www.annualcreditreport.com.

Credit inaccuracy

Between October 22, 2012, and February 1, 2014, the The CFPB handled roughly 31,000 complaints from consumers frustrated with credit reporting companies. The majority of those complaints have been about the accuracy and completeness of credit reports.

The top three concerns include:

• Incorrect information on a credit report: Almost three-quarters of the credit reporting complaints the CFPB received related to consumers believing that their credit reports contained incorrect information. Over one-third of these complaints were about incorrect account statuses -- such as a debt being reported as delinquent when it was already paid. Other consumers reported having information in their credit report that did not belong to them. One consumer reported having a mortgage placed in his credit report when he was only a sophomore in high school. Other consumers found that their date of birth was listed incorrectly or a bankruptcy filing was misreported.

Colene of Stayton, Ore., had a problem with accuracy. "Travelocity put my old Capital One/MasterCard number on my trip charges, so it does not show up on my monthly statement, "she writes in a ConsumerAffairs post. "Two and a half months later, it went to Sears/Citi with that number on it. They put a Sears number on it and began billing me. I do not have a Sears account. They have billed me for 15 months. I told them that I would pay them directly - the airlines, hotels, etc. But when I called, they were already paid by Capital One using that number. It never did get on my now credit card number. I get letters full of lies from Citi. They always talk about my Sears credit cards that I don't have. They sent it to a collection agency and to credit reports. I have never had bad credit. Capital One can't find the charges. Now what?"

• Frustration with the credit reporting company’s investigation: When consumers find this incorrect information, they can file a dispute directly with the credit reporting company. About 11% of complainants were frustrated with how the company handled a dispute they filed. Consumers expressed concern about the depth and validity of dispute investigations. Other consumers felt that the documentation they provided to dispute an item was not used in the company’s investigation. The CFPB heard from consumers who were reported as deceased by a credit reporting company, and even after they filed a dispute, the company did not fix the report.
• Difficulty obtaining a credit report or score: About 9% of credit reporting complaints were about consumers who said they were unable to obtain their free annual credit report or another copy of their credit report or score. Consumers say they feel as if they have reached “dead ends” when trying to obtain their credit reports. For example, one consumer claimed that she twice tried and failed to obtain her credit report from the three nationwide credit reporting companies.

Getting satisfaction

Consumers can file a dispute with a credit reporting company if they believe an item on their credit report is inaccurate. When they do, the company generally must inform the data furnisher and forward all relevant dispute information. The furnisher must then review that information, conduct an investigation, and respond to the credit reporting company. The company should then amend the credit report as appropriate.

If a consumer is not satisfied with the result of a dispute, he may submit a complaint to the CFPB. The agency processes complaints and sends them to the credit reporting company. The CFPB then expects the company to respond within 15 days with the steps they have taken or plan to take. Consumers can dispute the company’s response if they remain dissatisfied.

Do not ignore

The Bureau has published a supervisory bulletin warning companies that provide information to credit reporting agencies not to avoid investigating consumer disputes. The Bureau has observed that data furnishers sometimes respond to a dispute by simply deleting the disputed accounts from the information they pass along to the credit reporting company.

This practice can be detrimental to consumers. Once a consumer has filed a dispute -- if the furnisher finds that there is an error with the data it provided to a credit reporting company -- it must notify all companies that received that information. If the furnisher simply deleted that data without notifying those companies, the companies might not know that the information was wrong and that could lead to an inaccurate credit report. In addition, investigations may uncover broader problems in the furnisher’s system or process, like software flaws, that impact the accuracy of the information furnishers provide to credit reporting companies.