Consumers Benefit by CFPB Monitoring Credit Bureaus
The Consumer Financial Protection Bureau may soon make another move that could help consumers: bringing transparency and public accountability to credit reporting agencies.
Beginning September 30th, the CFPB will monitor over 30 of the country’s biggest credit bureaus and investigate if they are following the law.
This is a big step for the federal government which has never had widespread access to information about the credit reporting industry. The CFPB will also have oversight over specialty credit reporting companies, including those that focus on payday loans, resellers of credit reports, and companies that analyze credit report information.
Until now, credit agencies have been like the Wizard of Oz, powerful but unapproachable. Their scoring formulas are a mystery, but they know everything about you–from whether you pay your bills, child support, and homeowner’s dues to the amount of credit that you have available on your credit card or if your home is in a greater flood risk area. Their credit reports and credit scores are almost indisputable and directly affect the financial lives of every American who has applied for a loan, job, mortgage, insurance or attempted to rent an apartment.
Credit scores now cast long shadows over many areas of our personal lives. The credit score is how businesses judge you and determine the interest rate you will pay. Every American deserves an accurate report, and the chance to easily dispute errors and get timely corrections. The CFPB recently created a way to handle credit card complaints and help with their resolution. It will be very beneficial for consumers if the CFPB can provide the same service for credit bureaus.
According to the CFPB, each of the three biggest credit reporting companies maintain files on an estimated 200 million Americans gathered from over 10,000 providers of information. Approximately three billion credit reports are issued annually and more than 36 billion updates are made to consumer credit files.
The CFPB will start monitoring the credit bureaus in three areas: accuracy of the information received by the credit reporting companies, accuracy in assembling and maintaining that information, and the processes that govern error resolution. The Bureau will make sure the reporting and information provided by lenders as well as other companies that furnish information is accurate and reliable.
This is a big step forward in protecting consumers, but consumers must still protect themselves.
* Review your credit report and make sure all of the debts are accurate. Each year, you can get a free credit report from the three credit bureaus (Experian, TransUnion, Equifax) through AnnualCreditReport.com.
* Know your rights. Under the Fair Credit Report Act, both the credit reporting company and the information provider are responsible for correcting inaccurate or incomplete information in your report. Tell the credit reporting company, in writing, what information you think is inaccurate. Include copies (you should keep the originals) of documents that support your position. Credit reporting companies must investigate the items in question unless they consider your dispute frivolous. When the investigation is complete, the credit reporting company must give you the written results and a free copy of your report if the dispute results in a change. A credit reporting company can report most negative information for seven years and bankruptcy information for 10 years.