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A Report on Credit Reporting Agencies

A few days ago, Representative Jim Clyburn, Chairman of the Select Subcommittee on the Coronavirus Crisis, sent a LETTER to Rohit Chopra, the Director of the Consumer Financial Protection Bureau, requesting the CFPB review the three main bureaus for possible violations of the FCRA.

Chairman Clyburn’s letter alleges, “Information obtained by the Select Subcommittee indicates that there are longstanding problems with the Nationwide Consumer Reporting Agencies’ practices for responding to consumers who challenge credit reporting errors.” In case you missed it, the three credit bureaus, Equifax, TransUnion, and Experian, of possible violations of the Fair Credit Reporting Act. The chairman is asking for a thorough investigation into the failure of the said companies to respond to and resolve consumer credit errors raised during the lockdown.

According to the Select Subcommittee...

The Bureaus are Disregarding Millions of Disputes Based on Speculative or Overly Broad Criteria: Over 13 million dispute submissions were discarded by the bureaus without any investigation in 2019–2022. Wow! This is really absurd, but it looks like a direct attack on consumer integrity and knowing that they rely on the bureaus to fix their credit inadequacies. However, the CFPB was quick to note that a failure to investigate these disputes was a violation of the Fair Credit Reporting Act.

Some of the reasons for discarding the claims were silly. For example, Experian did not attend to dispute claims because envelopes or letters had similar colors, fonts, or verbiage. TransUnion also did not. And Equifax disregarded dispute complaints due to language and zip code. The committee termed this action speculative and vague.

The Bureaus Overly Rely on Data Furnishers to Investigate Disputes: it noted that between 2019 and 2021, the three credit bureaus referred more than half of the disputes to furnishers. TransUnion referred 80–82%, followed by Equifax with 62% and Experian with 54–56%, respectively.

This was especially worrisome as furnishers were inefficient and never conducted satisfactory investigations, as cited by the CFPB and other stakeholders. Furthermore, the bureaus do not bother to conduct further investigations to verify if the furnishers’ reports were in order.

The Majority of Disputes Do Not Result in Relief for Consumers:

According to the letter, most of the disputes did not do anything for the consumer as the problems still lingered even after reports were made. The bureau indicated that staff shortage was why many disputes were not adequately investigated. Furthermore, during the pandemic period (2019 to 2021), the three bureaus made no changes that brought any relief to consumers. By percentage, Equifax has the highest with 53%– 57%, Experian following with 48%, and TransUnion with 47 to 51% in the three years reviewed by the bureau.

According to the CFPB, this lackadaisical attitude led to severe financial difficulty, stress, and mental breakdown for consumers due to unresolved and incorrect errors in their credit reports. It also noted that some customers lost their jobs, housing, and access loans because of this mistake.

Millions of credit customers understand what the subcommittee chairman is saying, as you might have noticed a lack of response, no response at all, or stalled letters from the bureaus. This is great, as consumers are happy that these bureaus are getting called out to face the music. Furthermore, consumers are getting compensated to weather the aftermath of the pandemic and the harsh economic situation in the country.

So how did this all start?

The select subcommittee received a report from the CFPB that dispute processing dropped during the pandemic as consumers noticed error correction or removal on their credit reports stalled. The CFPB believes the dispute is more than the number stated at over 336 million between the three credit bureaus. The CFPB noted that Equifax has nearly 14 million in 2021, as their office has received a record-breaking 619,000 credit complaints from consumers in 2021 alone.

If proven, these alleged practices will have had an impact on your business and will have confirmed longheld suspicions of deliberate and coordinated Bureau Stall Tactics.

But how

If the report is accurate, then it means the credit bureaus are intentionally subjecting many Americans to difficult economic times as incorrect credit scores could potentially prevent them from essential opportunities, including housing, loans, and employment, among so many other things. The chairman urged the CFPB to use its power to investigate these claims and address the issues, which would bring relief to millions of Americans. In conclusion, we are just happy that the “big credit boys” are under the microscope and, finally, our voices are heard by the necessary authorities.

Credit reporting and information are critical pillars in stabilizing the financial sector as their reports determine the capacity and capability of the consumer to collect and repay loans or access other benefits. If credit reporting bureaus stall or intentionally refuse to respond to complaints caused by their inadequacies, we all suffer.

Remember, fixing the damage caused by Equifax, Experian, and TransUnion will not be done overnight, but with a vote of confidence from Congress; change is definitely on the way.

We must remember that these companies are in business with one goal – profit. They do not care about your problems, but without you, they lose.

So this is the time to take a stand and fight the good fight. Stay with us as the story unfolds and the CFPB investigation takes flight as many details are still unknown.