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The three top credit bureaus that have a strangle-hold on your credit score are getting a very poor performance report. A new analysis by the Consumer Financial Protection Bureau says that Equifax, Experian, and TransUnion are \\u201croutinely\\u201d failing to respond to consumer complaints about errors. Their performance is allegedly so bad that the CFPB says only \\u201ctwo percent\\u201d of complaints were addressed last year. (1)

Hi, I\'m Kathy Fettke and this is Real Estate News for Investors. If you like our podcast, please subscribe and leave us a review.

As you know, a good credit score is extremely important for things like getting a credit card or buying a home. In the case of a home purchase, a higher credit score means you\\u2019ll get a lower interest rate, and save tons of money over the life of the loan.

Credit scores can also play an important role in other kinds of decisions, such as the hiring of a new employee, the approval of a rental applicant, or the issuing of a new insurance policy. Whatever the game plan, the higher the credit score, the better the outcome for the consumer. And that means you don\\u2019t want any errors that will bring that score lower.

The Right to Dispute Errors

When those errors occur, consumers have the right to dispute that information, and to have it fixed. According to the CFPB, most of the complaints sent to the bureaus qualify for a mandatory response, but they apparently \\u201cchanged\\u201d the process for responding to complaints in 2020. According to the CFPB\\u2019s report, that has resulted in a faster process for closing complaints and a much lower rate of resolution, from 25% in 2019 to just 2% last year.

The CFPB director Rohit Chopra told realtor.com: \\u201cAmerica\\u2019s credit reporting oligopoly has little incentive to treat consumers fairly when their credit reports have errors.\\u201d He says the CFPB report is \\u201cfurther evidence of the serious harms stemming from their faulty financial surveillance business model.\\u201d (2)

The CFPB typically includes information on consumer complaints in its Consumer Response Annual Report. This report is a stand-alone analysis because of the huge number of complaints it received from consumers who aren\\u2019t getting their credit reports fixed.

The report says that between January of 2020 and September of 2021, the CFPB received more than 800,000 complaints. More than 700,000 of them were directed at Equifax, Experian, or TransUnion. Consumers are obviously frustrated about the situation. Among the issues, they say:

1 - They were caught in an automated response system that did not result in a solution to their problems.

2 - They were left without options when the source of the incorrect data argued against them\\u2026 and\\u2026

3 - They wasted a lot of time, energy, and money trying to get errors fixed, but were unsuccessful.

Consumers At a Disadvantage

If you haven\\u2019t dealt with this issue yet, the Washington Post published an article that paints a very clear picture. In one example, it says a creditor incorrectly reports that you were horribly late on a payment. As a result, your credit score drops substantially. The consumer then files a complaint with the credit bureaus and provides proof that the late payment never happened. (3)

The credit bureaus contact the creditor who gave the wrong information. They are called \\u2018data furnishers\\u201d by industry insiders. The creditor allegedly checks the data and sends the same bogus data back to the credit bureaus, which then tell the consumer that the creditor has \\u201cverified\\u201d that the information is correct. As the Post article says: \\u201cThis back and forth goes on for months, or for the truly unfortunate, years.\\u201d

As if that\\u2019s not bad enough, the Post article says that even for consumers who get the errors fixed, those same errors could suddenly find their way back to your credit report during computer updates that might pull old information from a large database.

Obligated to Address Complaints

Ed Mierzwinsky of the U.S. Public Interest Research Group says the credit bureaus \\u201chave never considered consumers as their customers. They\\u2019ve always considered consumers as a nuisance.\\u201d They are obligated by law, however, to correct any errors, and they are supposed to do this within 30 days.

In the CFPB report, it says: \\u201cThe (credit bureau) responses to these complaints raise serious questions about whether they are unable\\u2013or unwilling\\u2013to comply with the law.\\u201d This stand-alone report was submitted to Congress and could be used for debate on how to address the problems that consumers are having with the credit bureaus.

As the report states: \\u201cMore than 200 million Americans have credit files and nearly 15,000 providers furnish information about consumers to the (credit bureaus). Thus, the actions, and inactions, (by the credit bureaus) have large implications for consumers\\u2019 financial well-being and the economy more broadly.\\u201d

You can read more the CFPB report by following the a link in the show notes at newsforinvestors.com.

You\\u2019re listening to the News For Investors podcast, which is produced by the real estate investing network, RealWealth. It\\u2019s free to join, and free to access hundreds of webinars and articles on real estate investing. As a member, you also have access to the Investor Portal where you can view sample property pro-formas and connect with our network of resources. That includes experienced investment counselors, property teams, lenders, 1031 exchange facilitators, attorneys, CPAs and more. Click here to join now!

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Thanks for listening. I\'m Kathy Fettke.

Links:

1 -https://www.consumerfinance.gov/data-research/research-reports/annual-report-consumer-credit-reporting-complaints-analysis-of-complaint-responses-equifax-experian-transunion/

2 -https://magazine.realtor/daily-news/2022/01/07/cfpb-credit-bureaus-fail-to-fix-errors-in-consumer-profiles

3 -https://www.washingtonpost.com/business/2022/01/07/fixing-credit-report-errors/