When a company supplies the wrong information about you to a credit-reporting company, it can cost you time and money. Whether it’s a simple mistake such as a misspelled name or a record of an unpaid bill that you actually paid, credit-report errors can affect the cost of your credit and insurance and seriously complicate a loan or job application.
One in five consumers had a mistake on a credit report, according to a recent study by the the Federal Trade Commission, and 5 percent had serious errors that could lead them to paying more for credit. When you discover an error on your report, fixing it can be incredibly complicated and frustrating.
There is some good news on the credit-report front, thanks to action by the Consumer Financial Protection Bureau. The CFPB has issued a sharp warning to creditors and others that furnish data to credit bureaus. Those companies have been put on notice that they must investigate and review credit report disputes as required by law, and if a furnisher has violated the law, the CFPB is prepared to take action against it.
In a bulletin (PDF) circulated on Sept. 4, the CFPB reminded the furnishers that they have a legal obligation to investigate consumer disputes forwarded by the consumer reporting companies, and that they must review all relevant information provided with the disputes.
Most important for consumers, furnishers must report the results of their investigation to the national consumer reporting companies (Equifax, Experian, TransUnion) if those companies might have received inaccurate or incomplete credit information. Furnishers also have to modify, delete, or permanently block disputed information that is incomplete or inaccurate or cannot be verified.
At Consumers Union, the policy and advocacy arm of Consumer Reports, we think this bulletin sends the right message, not just to creditors, but also to the entire credit-reporting industry. It’s a clear signal that companies that have avoided close scrutiny for years are being held to a higher standard when it comes to how they treat consumers.
We think that greater oversight of credit reporting is long overdue. That’s why we’re fighting to eliminate some of the confusion and mystery that are part of this murky industry. We’re pushing Congress to pass a bill to require credit scores to be included in your annual, free credit report so you can get all the information you need to manage your money. Learn more about our credit-score campaign.