New Government Report: Experian, Equifax, and TransUnion Rarely Act on Complaints About Credit File Errors
Last updated January 26, 2022
If you spot a mistake on your credit report and contact the credit bureau, there’s a good chance nothing will happen. Equifax, Experian, and TransUnion together provided relief when alerted to errors less than two percent of the time last year. That’s a huge drop from the already low 25 percent in 2019, according to a new report from the Consumer Financial Protection Bureau (CFPB).
Listen to audio highlights of the story below:
“America’s credit reporting oligopoly has little incentive to treat consumers fairly when their credit reports have errors,” said CFPB Director Rohit Chopra. “[This] report is further evidence of the serious harms stemming from their faulty financial surveillance business model.”
Consumers submit more complaints to the CFPB about inaccurate information in their credit files than any other problem. The CFPB received more than 700,000 complaints regarding Equifax, Experian, and TransUnion from January 2020 through September 2021, more than half of all complaints received during that time.
Based on a review of those complaints, the CFPB concluded: “Overall, consumers describe a consumer reporting system that is not working for them and the serious consequences that follow when inaccurate information is—and remains—on their consumer reports.”
In many cases, the CFPB noted, Equifax, Experian, and TransUnion “relied heavily on template complaint responses instead of providing meaningful and thorough responses,” even though they have up to 60 days to do so.
The Consumer Data Industry Association, which represents the big three credit bureaus, responded to the damning report with a statement that said it agrees with the CFPB that “responding to legitimate consumer complaints and getting credit reports right are paramount.”
It’s the Law
When a consumer contacts Experian, Equifax, or TransUnion about incomplete or inaccurate information in their file and the problem is not resolved, they often file a complaint with the CFPB. The agency then forwards these complaints to the appropriate credit bureau.
The credit bureaus are required by federal law (the Fair Credit Reporting Act) to investigate and tell the CFPB what they found and what action, if any, they took.
Equifax and TransUnion frequently failed to provide the CFPB with that information, and often declined to act when they believed that third-parties were involved in submitting complaints, the report noted.
The CFPB analysis found that more than half of these forwarded complaints did not get required reviews, based in part on the suspicion they were submitted by third parties, so consumers did not receive meaningful responses.
“Overall, consumers describe feeling frustrated and stressed when the nationwide consumer reporting companies’ automated processes for correcting inaccuracies do not work or when they do not get responses to their concerns,” the report said.
Consumer advocate Ed Mierzwinski, senior director for federal programs at U.S. PIRG, calls the CFPB report “a shot across the bow.” The agency is warning the credit bureaus that it believes they are “violating the law by not responding to consumers,” he said.
A Lame Excuse
While credit bureaus might decide to consider complaints filed by credit repair companies as suspicious or frivolous, they can’t do that with consumer complaints forwarded them by the CFPB. Those complaints must be taken seriously and dealt with, as required by law.
“The CFPB has made it clear that consumers are allowed to use a third party to help them file a complaint with the CFPB, like a lawyer, a family member, or even a credit repair outfit— although we don't recommend that—but you are allowed to,” said Chi Chi Wu, staff attorney at the non-profit National Consumer Law Center (NCLC).
Industry practices are so sloppy, Wu said, that the credit bureaus reject complaints that use sample complaint forms provided by the CFPB and the Federal Trade Commission, designed for people to cut and paste.
Note: It’s best to avoid credit repair companies. Some are outright scams and even the ones that aren’t criminal enterprises can make your problem worse. Federal regulations prohibit credit doctors from charging upfront fees. They can only get paid if they deliver the services promised. Remember, a credit repair company cannot do anything you couldn’t do yourself; in many cases, steps you can take will be more effective than anyone you can hire. For example, many creditors won’t talk to credit repair firms.
Uncorrected Errors Create Serious Problems for Consumers
Good credit is important for many aspects of life—and the range of companies needing access to your credit information keeps expanding—so the repercussions from erroneous information can be substantial.
Lenders use credit scores, which are calculated in part using information in your credit reports, to approve or deny loans and to determine interest rates. In states that allow them to do so, property insurance companies heavily consider credit histories when determining what rates to charge for coverage. Utilities, cable companies, wireless phone providers, and landlords also run credit checks before approving establishment of new accounts.
“We're seeing people being shut out of housing because of these errors,” Wu said. “It's one thing if you can't get a credit card or refinance your house, but quite another when you can't get a roof over your head, when you have to sleep in your car because of a credit reporting mistake.”
The credit reporting industry says its proud of its high accuracy rate, but several studies done in recent years have shown mistakes happening at an alarming rate.
An analysis by Consumer Reports last year found errors in more than one-third of the credit files checked. CR asked volunteers to get a copy of their credit reports and then complete a survey, and nearly 6,000 people participated. While not a nationally representative sample, the results were eye-opening:
- 34 percent of participants found at least one error.
- 29 percent found errors related to their personal information. CR concluded that some of these mistakes were serious enough to “dramatically lower” the person’s credit score.
- 10 percent said they found it difficult or very difficult to access their credit reports.
The Consumer Data Industry Association challenged CR’s results.
Consumer advocates, who’ve been focused on the issue for decades, argue CR’s study is yet another indication of a serious problem for consumers. U.S. PIRG’s Mierzwinski said the failure to fix credit file errors is “an old problem” that has skyrocketed during the pandemic.
NCLC’s Wu, who’s been following the industry for 20 years, said the big three credit bureaus have always done a “crappy job” of handling complaints. Her advice to those who file a complaint and don’t get a response: File another one with the credit bureau and file a complaint with the CFPB. If you still don’t get a response, and the error is significant, you may want to consider consulting a lawyer.
What’s Next?
The CFPB report noted that its findings “raise serious questions about whether they [the credit bureaus] are unable—or unwilling—to comply with the law.”
Consumer advocates believe the CFPB, under its new director, Rohit Chopra, is ready to take steps to reform the credit reporting agencies.
“It’s way past time for reform,” said Wu, who called for “swift, assertive, and uncompromising action that fundamentally reforms the credit bureaus in a deep, structural manner.”
More Info
- From Checkbook: How to Spot a Credit Repair Scam and What You Can Do to Improve Your Credit Scores
- CFPB's Full Report on Consumer and Credit Reporting Complaints
- Consumer Reports' Study on Credit Bureau Errors
Contributing editor Herb Weisbaum (“The ConsumerMan”) is an Emmy award-winning broadcaster and one of America's top consumer experts. He is also the consumer reporter for NW Newsradio in Seattle. You can also find him on Facebook, Twitter, and at ConsumerMan.com.