One in Four
If there is a take away from the recent report by the Office of Oversight and Investigations on the status of reporting errors by the credit bureaus, it is that one in four consumers have material errors with at least one major credit report.
That's one in four consumers that may not be able to qualify for a home loan or lease. For those people, it could be the deal breaker on gainful employment or higher insurance premiums. Ultimately, these errors can create a life long struggle with the credit reporting agencies, or CRA's.
For a long time, consumers didn't exercise their right to dispute inaccurate information on their credit report. Fortunately, over the past decade, consumers are starting to take a stand. Since 2014, the amount of accounts disputed with the CRA's has increased by over 60%, yet the removal rate of inaccurate derogatory information has stayed consistent around 55%. Even with a the dramatic increase in dispute requests, only 13% of consumers with credit profiles actually dispute accounts.
For those that take on the challenge of investigating inaccuracies with the CRA's, it can be a long, uphill battle.
"70% of these consumers [who disputed accounts] continued to believe that at least one piece of previously disputed information that remained on their reports was inaccurate. In addition, two of the three CRA's reinserted previously removed negative information back into consumers' credit reports".
The lack of transparency and accuracy in the investigation process has required CSO's and consumers to re-investigate inaccurate information multiple times to ensure the proper removal of inaccurate or unverifiable accounts. Ultimately, this process leaves consumers bitter and upset with the prospect of a healthy credit profile, and is the primary reason the credit bureaus rank in the top 5 industries every month for CFPB complaints.
The Bright Side
Consumers are getting better access, but at a cost. The Equifax data breach that impacted 145 million consumer credit profiles has raised the alarm on the lack of access consumers have to their credit profiles. Because of this, you're seeing new and exciting ideas about better access to consumer files and completely new credit data models (such as Bloom Credit) that could dramatically impact the industry in a positive way.
From a legislative perspective, the 2015 lawsuit between the New York State Attorney General, Eric Schneiderman, and the CRA's is starting to have an impact on the reporting standards of the credit bureaus. Other regulatory authorities, like the CFPB, have worked to enforce tighter restrictions on reporting standards for public records and charge offs. Ultimately, these changes should drive a higher level of accountability for CRA's.
Don't Give Up
Per the Fair Credit Reporting Act, you are entitled to a fair and accurate credit profile. Unfortunately, one in four consumers are impacted financially because of the credit bureaus neglect to ensure accuracy.
If you or your clients are battling with credit challenges, stay vigilant. A healthy credit profile is worth fighting for.