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Credit Bureaus Account For More Than 50% of CFPB Consumer Complaints

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Credit Score rating based on debt reports showing creditworthiness | Credit Bureaus Account For More Than 50% of CFPB Consumer Complaints | featued

Credit bureaus are getting the ire of the American consumer. According to a report from the Consumer Financial Protection Bureau, hundreds of thousands of Americans filed complaints against credit evaluators.

RELATED: Check Thy Credit, Know Thy Credit

CFPB Says More Than Half Of Complaints Are For Credit Bureaus

CFPB - CONSUMER FINANCIAL PROTECTION BUREAU sign | Credit Bureaus

The new CFPB report said that between January 2020 to September, more than 50% of complaints received were directed at credit bureaus.

This included Equifax, Experian, and TransUnion – the three largest credit reporting companies. Customers sent about 700,000 complaints about credit bureaus during this period.  

In a statement, CFPB Director Rohit Chopra said that the current credit rating model is failing. “America’s credit reporting oligopoly has little incentive to treat consumers fairly when their credit reports have errors.

Today’s report is further evidence of the serious harms stemming from their faulty financial surveillance business model,” he said. 

Customers Frustrated With Faulty Automated Systems

Of course, the pandemic might have played a role in the rise in complaints. Companies had to adjust their customer service hours due to the shutdowns.

However, the majority of complaints stem from the credit bureau’s automated systems. The system made it difficult for consumers to correct faulty information.

In addition, many reported a frustrating dispute process, especially for surprise debts that came in. Many debts such as medical bills went straight to credit bureaus without the customer’s knowledge. 

In addition, irate consumers reported that calling the credit bureaus for assistance didn’t help much. The CFPB said that from 25% in 2019, credit bureaus only managed to provide assistance in 2% of cases. 

Credit Bureau’s Errors In Credit Reporting Existed Before the Pandemic

While credit errors have been around ever since the pandemic might have made things worse. This is according to Syed Ejaz, a financial policy analyst at Consumer Reports.

The organization said that today, more than a third of surveyed complainants found errors in the credit reports.

In contrast, the Federal Trade Commission said in 2012 that 1 in 4 consumers had at least one error in their reports or 25%.  

“This is a problem that existed long before the pandemic. It’s made more harmful and urgent because it limits access to affordable credit and financing to people who have been financially impacted by COVID-19,” Syed noted. 

Errors Carry Hefty Penalties For Consumers

Faulty assessments can lead to lower credit scores for Americans. This can lead to customers getting disqualified for housing rentals or mortgages, credit cards, and even jobs.

Meanwhile, loan borrowers can receive higher interest rates, which leads to bigger monthly payments.  

In the meantime, CFPB’s received complaints in 2020 doubled from its 2019 rates. Consequently, many politicians called for an end to private credit bureaus.

In fact, President Joe Biden pledged during his campaign to establish a public credit bureau within the CFPB. 

Watch the NBC News video reporting a new warning of errors on consumers’ credit reports:

Do you support the idea of establishing a public credit rating agency, given the problems with private credit bureaus?

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