CFPB snapshot reveals top consumer complaint: Incorrect information on credit reports

On August 25, the Consumer Financial Protection Bureau released its monthly consumer complaint snapshot, revealing the trends of complaints reported by borrowers and focusing on the one complaint overwhelmingly reported by consumers—incorrect information on a credit reports. These inaccuracies could be having a huge impact processes related to identifying credit risk.

The CFPB processed 105,000 credit reporting complaints, with early 7,000 credit reporting complaints in July 2015 alone, making credit report inaccuracies the third most popular type of complaint received by the CFPB. July’s volume of complaints was the highest number that the CFPB has received to date.

Ninety-seven percent of consumers polled reported that the inaccurate information found on their credit reports involved all three reporting agencies (Experian, Equifax and Transunion) and 9 percent complained of the agencies investigation of a dispute being insufficient. This last data point has however been called into question by a recent audit by the Office of the Inspector General (OIG), which found several “noticeable inaccuracies” in its analysis of 254,835 complaints in the Database as of June 30, 2014. Specifically, the OIG reported the Consumer Response does not review all company closing responses or verify if the company-selected response is consistent with the definition.

Even with some of the data being in question, the snapshot has wide-ranging implications for lenders trying to accurately make credit risk assessments—and potentially costing both consumers and lenders valuable business.

To address the inaccuracies and difficulties for consumers reporting them, in March of this year the three main credit bureaus entered an agreement with New York’s attorney general, Eric Schneiderman, to reform their practices. Among the changes being made include: agents being required to review each dispute rather than converting the complaint to a digital code to be reviewed by the issuing credit agency, medical debts will not be put on a consumer’s credit report until after a 180-day waiting period, and all medical debts being removed from a consumer’s credit report after the debt is paid by insurance.

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