Between the three major credit bureaus, Equifax, Experian and Transunion, credit files on over 200 million Americans are kept.
In the past, many consumers gave up fighting against these credit bureaus. They were trying to remove false debts and other errors found on their credit reports. Due to the credit bureaus’ lack of efforts to thoroughly investigate and respond within a timely manner to complaints about errors on credit files, those consumers suffered with lower credit scores. That caused them to pay higher interest rates on loans and purchases.
According to a University of California Law Review article(UCLA), “the effort to track the credit histories of 200 million Americans consumers is a multi-billion dollar industry dominated by three companies: Experian, Transunion, and Equifax.” These companies, the Law Review article pointed out, “make their money by assembling data from approximately 30,000 sources, including but not limited to creditors and collection agencies, and then selling that information to customers such as banks and finance companies.”
Consumers have legal rights under the Fair Credit Reporting Act (FCRA) to dispute certain credit report information. The consumer reporting agencies are obligated to correct or delete inaccurate, incomplete, or unverifiable information on a credit report. Yet credit bureaus have failed to an extent to comply with FCRA rules in responding to consumer complaints to correct provable errors on credit files. Complaints over the years about credit bureaus’ questionable practice finally led to an investigation by the Federal Trade Commission (FTC).
The FTC conducted consecutive studies to root out the burgeoning problems and recommend changes to benefit American consumers. A nationwide FTC study discovered “one out of every four American consumers who disputed false errors on their credit reports eventually quit fighting to correct the errors, primarily in part due to credit reporting agencies, and without supplying documentation in several cases the credit bureau agents would tell consumers that the lender or creditors who reported a debt had actually verified the debt or debts as accurate.”
The FTC Congressionally mandated study is the sixth and final study focused on National Credit Report Accuracy which is a follow-up report to a 2012 study that revealed astronomical figures showing, “one in four Americans have a credit report with errors.” (One) out of four add up to approximately 10 million people in the U.S. that have an error or multiple errors on their credit file serious enough to impact their credit power.
“Dealing with credit reporting agencies to have errors corrected can often seem overwhelming,” said John Ulzheimer, President of Consumer Education at CreditSesame.com. in an email message sent to Newsblaze. “The process is largely automated so it’s not as simple as picking up the phone and speaking with someone and engaging with them,” Ulzheimer said.
“After the credit bureau receives your dispute, they have either 30 or 45 days to complete their investigation, depending on how you received the report that you’re disputing,” Ulzheimer explained.
For decades, credit bureaus systematically engaged in unfair practices when it came down to resolving disputes filed by millions of Americans who discovered false debts and judgements on their credit report. For example, an investigation by top watchdog Consumer Financial Protection Bureau(CFPB) showed how credit bureaus only resolved an average of 15 percent of disputes made by consumers while the remaining 85 percent were referred back to lenders or creditors.
What An FTC Followup Discovered
To update the 2012 study, the FTC released a follow-up 2015 report. FTC investigators re-interviewed the same people in the 2012 study, and many of these individuals still had pending disputes with credit bureaus.
The FTC discovered the following:
Of 121 people whose complaints conclusively showed an error or errors on their credit report, the credit bureaus rejected their claims. 84 people out of the 121, approximately 70 percent, still complained that wrong information remained on their credit reports at least a year later, the FTC study found. On another note, approximately 30 percent(out of 101 consumers) agreed with the credit bureau’s decision that the disputed information was accurate.
FTC study found, many consumers whose complaints were rejected, did not recall any credit bureau agents contacting them to inform them whether the disputed information would remain on their report or explain why the errors or error would remain on the consumer’s file. The significant adverse findings raised critical questions whether credit reporting agencies are failing to inform consumers in writing of the bureau’s investigation results, according to the issuance of a press release statement by Commissoner Julie Brill.
“I can see people getting frustrated with the lack of progress and simply giving up,” Ulzheimer told Newsblaze.
Among Other FTC Mixed Results Findings:
- Approximately 70 consumers indicated their credit report file still had errors, although many said they’d given up the fight to have remaining errors on their credit report corrected. Of consumers with unresolved disputes, the study showed about(half) of the group said they would abandon any disputes with one or more bureaus.
- Slightly more than one in 10 consumers saw a change in their credit score after credit reporting agencies modified errors on their credit report; and approximately one in 20 consumers had a maximum score change of more than 25 points.
- Only one in 250 consumers had a maximum score change of more than 100 points. Many discouraged consumers admitted not having sufficient time to keep up the fight against reported disputes, and instead preferred to live with the errors that may or may not damage their scores to detrimental effect.
Steps to Take When Credit Agencies Don’t Remove False Information Off Your Credit Report
Credit reporting agencies can be stubborn when consumers insist that certain false information should be taken off their credit report. Here are some steps to take to fight back and possibly get the results you need to correct your credit file:
- File a complaint online against any credit reporting agency with the Federal Trade Commission(FTC). Go to www.ftccomplaintassistant.gov. You can also contact FTC by calling 877-382-4357.
- File a complaint against creditors responsible for supplying information to credit reporting agencies.
- If the creditor that furnished the incorrect or incomplete information fails to correct an error or advise the credit reporting agency of a correction, or if it advises credit report agency of the correction, but then reports the erroneous information again later, you can file a complaint either with FTC or if the creditor represents a large, major financial institution, file a complaint with a federal agency that oversees these kinds of institution.
- When dealing with large financial (creditor) institutions, your best bet is to contact Consumer Financial Protection Bureau(CFPB), a newly developed federal watchdog that oversees credit reporting agencies and large lending services that furnish information to credit bureaus. Unlike FTC, the CFPB has supervisory authority over credit reporting bureaus. To file a complaint with CFPB against credit bureaus, visit this site: www.consumer finance.gov – and click on Submit a Complaint.
- Check to see if your state has a Consumer Protection Agency, and if so, file a complaint there as well. Some states have laws on the books that apply to credit reporting agencies or creditors that supply debt information to major credit bureaus. Here is a list of Consumer Protection Agencies in all 50 states in the U.S. www.usa.gov/directory/stateconsumer/ Or check into filing a complaint with the Attorney General Office in your state.
Credit advocates and FTC also highly recommend consumers request a copy of their credit reports at least once or maybe twice a year. When checking your credit report only use – AnnualCreditRepor.com. Annual Credit Report is a company jointly owned by credit bureaus Experian, Equifax and Transunion, America’s largest credit reporting agencies. Listed on Annual Credit Report website, a consumer can receive up to three free credit reports per year.
This final FTC study recommends two things. First, that credit reporting agencies(CRA) properly review and improve the process they use to notify consumers about the results of dispute investigations. Second, that CRAs continue to explore efforts to educate consumers regarding their legal rights to review their credit reports and dispute inaccurate information.
Editor’s Note: This is Part-1 of an occasional series about how consumers should legally deal with credit report laws and Credit Bureaus.