Consumer rights activists have for decades decried the unchecked power and influence the three credit reporting bureaus possess in the entire financial world. A person’s financial reputation is incredibly important in their daily lives. These Three all powerful agencies are under Federal Scrutiny. Again!
Who are the Three Credit Reporting Agencies?
Experian, TransUnion, and Equifax control the processing and reporting of all consumer’s financial credit reporting. From the $500 first credit card a teenager opens with the help of their parents. To the young family building their credit profile In hopes of qualifying for their first home purchase. Banks, lenders and financial institutions hold the reports from these three credit bureaus as the report card for a consumer.
The three reports from these three powerful agencies is gathered by the Fair Isaac Corporation, also known as FICO. This is what they refer to when they mention “Fico Score”. The scoring ranges from 300 to 850.
The credit bureaus do not judge or provide judgment on a consumers credit. They do however hold power on what is recorded and reported and shown on a certain consumers report. They hold power and influence on what mistakes on these reports can be corrected, and what unfair reports can be taken off. This is a key element of power.
With great power comes great responsibility.
What is the CFBP?
The Consumer Financial Protection Agency (CFPB) is an agency of the United States government responsible for consumer protection in the financial sector. They are the agency that supervises all Financial Related companies, Agencies, Banks and entities. The CFPB made an official statement that the big three credit reporting agencies are still not acting in good faith towards consumers. A new report from the agency says Equifax, Experian, and TransUnion combined only resolved less than 2 percent complaints from consumers in 2021, down from nearly 25 percent in 2019.
“America’s credit reporting oligopoly has little incentive to treat consumers fairly when their credit reports have errors,” stated CFPB Director Rohit Chopra. “Today’s report is further evidence of the serious harms stemming from their faulty financial surveillance business model.”
CFPB reports that more than 200 million Americans have credit files and the data within their digital files play an essential role in their lives, impacting more than just their access to financial services. Lenders, mentioned above, rely on this data when deciding whether or not to approve loans. The credit score also greatly impacts the repayment risk a consumer projects, and the terms a consumer qualifies for.
This credit data is also used in employment decisions, in obtaining access to housing, insurance, and essential utilities. Inaccuracies in credit processing and reporting drives up the cost of credit and limit opportunities such as starting a small business or buying a home.
The CFPB received more than 700,000 consumer complaints about the three reporting companies from January 2020 through September 2021, more than half of all their complaints. The most frequent complaint CFPB receives is about inaccurate credit file information, with consumers most often claiming that the inaccurate data belongs to someone else or describing being victims of identity theft.
A common cause for complaint was also the actions of the Credit Bureaus after the 2020 Pandemic. The Federal Government’s freeze on foreclosure as well as the following mortgage mortarium has thrown a wildcard into the credit reporting process. Mortgage Borrowers were told by the Federal Government that if they had lost income or suffered other hardships due to the Pandemic, they could forgo mortgage payments and their credit would not be impacted. However thousands of homeowners have filed complaints against the Credit Bureaus claiming the opposite happened. They fell behind on payments, were granted a mortgage forbearance by the lender. However the payments they did not pay were reported as “delinquent” by the credit agencies. Thus ruining their credits. This issue has yet to be resolved by the Mortgage Companies or the Credit Agencies.
What can you do if you filed a complaint against a Credit Reporting Agency and got no resolution?
Roosevelt Law Center, the nation’s leading Real Estate, Mortgage and Foreclosure Law firm has received an extraordinary amount of consumer complaints relating to this issue. If you fell behind on mortgage payments due to valid hardships, or were granted a mortgage mortarium in 2020, the payments you missed should not have been reported as “delinquent” by the credit agencies. Give us a call today to better understand your legal options.
If you have a complaint against the Credit Report Agencies that does not have to do with mortgage payments, but rather other unfair or incorrect reporting, you still have options that you the three agencies will not share with you.
There are federal laws in place to protect consumers right when and where it relates to their credit
The Fair Credit Reporting Act (FCRA) requires credit reporting agencies to conduct a review of consumer complaints sent to them through the CFPB. This includes complaints about incomplete or inaccurate information. The credit reporting agencies are required to review these campaigns fairly and report their determinations and actions on these complaints back to the CFPB.
The Bureau found the three agencies often failed to provide substantive responses, especially when they alleged the complaints were sent in by third parties. However, consumers are allowed to authorize third-party representatives to submit complaints on their behalf.
The report found:
- Equifax most often promised to open investigations and send the results to the consumers at later dates but did not provide CFPB with the outcomes of the investigations.
- TransUnion made similar promises and frequently failed to provide the outcomes of investigations to the CFPB. It consistently refused to take action because it believed the complaints were submitted by third parties.
- Experian also frequently refused to act on third party complaints but did substantively respond to the remaining complaints.
- Now this is indeed surprising. considering the many “Credit Repair” companies that have supposedly been assisting consumers in “repairing” their credit for a fee.
Medical debts are one of the main origins of consumer reporting inaccuracies and mistakes. Consumers find that complex pricing structures, the complex system of insurance coverage, and frequent delays in receipt of bills create an unnavigable quagmire that make it much harder to resolve billing errors. Previous CFPB research points to a struggle on the part of consumers to determine whether the debt even belongs to them or if the amount is accurate to begin with.
Consumers describe a reporting system that is not fair to them and the serious consequences that follow when inaccurate information is, and remains, on their consumer reports.
CFPB also found:
- All three companies rely heavily on boilerplate responses rather than providing ones that are meaningful and useful, despite having up to 60 calendar days to do so. Severe understaffing, under-training and lack of empathy all play a part to promote this practice.
- Beginning in early 2020, Experian and TransUnion stopped providing substantive responses to consumers’ complaints if they suspected that a third-party was involved in its submission.
- In many instances, Equifax and TransUnion promised to investigate but failed to provide the outcomes of their investigations to the CFPB. instead they stated they would forward the complaints to their “dispute channel.”
Overall, consumers describe feeling frustrated and mistreated by the three agencies. The three all powerful agencies who’s automated processes for correcting inaccuracies does not work correctly or in time. Especially evident when they do not get responses to their concerns. Consumers report that they spend time, energy, and money to try to correct inaccuracies. With no resolution. Just stress and a bad reputation as consumers. A reputation that impacts their lives tremendously. The feeling of pushing a large round rock up a hill!
Roosevelt Law Center is proud to provide consumers with important information regarding their credit, mortgage, and foreclosure rights. Information is power. Consumers should always strive to be empowered.
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