Episode Details

The three top credit bureaus that have a strangle-hold on your credit score are getting a very poor performance report. A new analysis by the Consumer Financial Protection Bureau says that Equifax, Experian, and TransUnion are "routinely" failing to respond to consumer complaints about errors. Their performance is allegedly so bad that the CFPB says only "two percent" of complaints were addressed last year. (1)

Hi, I'm Kathy Fettke and this is Real Estate News for Investors. If you like our podcast, please subscribe and leave us a review.

As you know, a good credit score is extremely important for things like getting a credit card or buying a home. In the case of a home purchase, a higher credit score means you'll get a lower interest rate, and save tons of money over the life of the loan.

Credit scores can also play an important role in other kinds of decisions, such as the hiring of a new employee, the approval of a rental applicant, or the issuing of a new insurance policy. Whatever the game plan, the higher the credit score, the better the outcome for the consumer. And that means you don't want any errors that will bring that score lower.

The Right to Dispute Errors

When those errors occur, consumers have the right to dispute that information, and to have it fixed. According to the CFPB, most of the complaints sent to the bureaus qualify for a mandatory response, but they apparently "changed" the process for responding to complaints in 2020. According to the CFPB's report, that has resulted in a faster process for closing complaints and a much lower rate of resolution, from 25% in 2019 to just 2% last year.

The CFPB director Rohit Chopra told realtor.com: "America's credit reporting oligopoly has little incentive to treat consumers fairly when their credit reports have errors." He says the CFPB report is "further evidence of the serious harms stemming from their faulty financial surveillance business model." (2)

The CFPB typically includes information on consumer complaints in its Consumer Response Annual Report. This report is a stand-alone analysis because of the huge number of complaints it received from consumers who aren't getting their credit reports fixed.

The report says that between January of 2020 and September of 2021, the CFPB received more than 800,000 complaints. More than 700,000 of them were directed at Equifax, Experian, or TransUnion. Consumers are obviously frustrated about the situation. Among the issues, they say:

1 - They were caught in an automated response system that did not result in a solution to their problems.

2 - They were left without options when the source of the incorrect data argued against them… and…

3 - They wasted a lot of time, energy, and money trying to get errors fixed, but were unsuccessful.

Consumers At a Disadvantage

If you haven't dealt with this issue yet, the Washington Post published an article that paints a very clear picture. In one example, it says a creditor incorrectly reports that you were horribly late on a payment. As a result, your credit score drops substantially. The consumer then files a complaint with the credit bureaus and provides proof that the late payment never happened. (3)

The credit bureaus contact the creditor who gave the wrong information. They are called 'data furnishers" by industry insiders. The creditor allegedly checks the data and sends the same bogus data back to the credit bureaus, which then tell the consumer that the creditor has "verified" that the information is correct. As the Post article says: "This back and forth goes on for months, or for the truly unfortunate, years."

As if that's not bad enough, the Post article says that even for consumers who get the errors fixed, those