Your credit report is one of the core aspects of your financial health, and unfortunately, the three major credit bureaus that manage credit scores are in hot water with consumers — leading to rising CFPB complaints.
The Consumer Finance Protection Bureau (CFPB) reports that the total number of consumer complaints regarding credit bureaus from 2021 to 2022 jumped from 496,000 to 800,394. Consumers can submit complaints against financial institutions about the products those institutions offer, including bank accounts, mortgages, loans, and more.
Moreover, 94% of complainants attempted to address their issues directly with the bureaus first, demonstrating a bleak picture of two startling events: the credit bureaus are not helping the ones that inquire, and that could be many more who don’t know about the CFPB and the resources it provides consumers.
These errors at scale affect people of all walks of life and could cost consumers thousands of dollars through no fault of their own. They can also create mistrust for consumers who just want to have accurate credit reporting so they can make financial decisions for themselves and their families.
Here’s how this affects you and what you need to know.
Credit report errors are unfortunately common
Your credit report is a historical list of your debt obligations, such as the sum of your credit card balances, your outstanding mortgages or other loans, and the number of times you’ve applied for additional credit or missed a payment.
This report is pulled by banks for transactions like applying for a new credit card, a mortgage, or a car loan, and having too many negative marks on your credit report can make it harder to qualify for these financial products. However, there are many ways for credit bureaus to compromise, and even ruin, an otherwise solid credit report.
The CFPB says that common credit report errors include:
- Identity errors (i.e., misspellings in your name, wrong phone number or address)
- Account status (i.e., closed accounts reported as open, same debt listen more than once)
- Data management errors (i.e., accounts listed more than once)
- Balance errors (i.e., credit limit or balance listed incorrectly)
The information in your credit report also goes into the equation that determines your credit score, so having an error on your credit report could lower your credit score.
In 2021, a Consumer Reports investigation found that 34% of those surveyed had at least one error on their credit report. And when consumers discover these and try to resolve them, they are met with a long, drawn-out process that can take months to even years.
While some of these errors may seem trivial, like a wrong address or typo in a name, there are stories of people that have had their financial lives ruined because of their credit reports being inaccurate.
A story recently circulated of a man who had his identity stolen as a minor, and when he applied for an apartment once he reached adulthood, he discovered a laundry list of purchases and debts that didn’t belong to him. Although the error wasn’t caused by a credit bureau directly, it illustrates the limitations of trusting our financial wellbeing to the three largest credit bureaus — Equifax, Experian and TransUnion.
Moreover, even if you have a great credit score, you could still be affected by errors. In early 2022, Equifax sent out incorrect scores due to a “coding issue.” The credit bureau said in a statement, “Our data shows that less than 300,000 consumers experienced a score shift of 25 points or more.” They followed by stating, “While the score may have shifted, a score shift does not necessarily mean that a consumer’s credit decision was negatively impacted.” There is now a class action investigation for those who have been affected by the error.
These errors from the credit bureaus can be detrimental as it impacts your ability to qualify for lending or for more favorable interest rates on loans — leading to larger costs for consumers with little recourse of potentially getting that additional cost back.
Lastly, in October 2017, Equifax announced it had a large customer information breach, impacting nearly 147 million customers — so it’s likely you may have been impacted. There is a class action settlement available for those available. The CFPB has a website to read more about the breach, and what you can do to protect yourself from any potential identity theft.
How to submit CFPB complaints about credit report errors
If you discover any errors on your credit report, it’s important to do your research and have detailed documentation proving that the error is in fact an error.
Once you have your proof, it’s best to first contact the correct credit reporting agency. The contact information, as well as supporting documentation can be found here. However, expect this process to take several months. If the credit bureau is taking an egregious amount of time, you can direct CFPB complaints here.
The M1 bottom line
Regardless of your financial status, anyone can have an error on their credit report. And that error (or errors) could weigh down your credit score and hurt your ability to qualify for loans, get the best APR, or be approved for housing.
If you haven’t checked your credit score recently, you’re able to get one free credit report each year from the Annualcreditreport website. And if you’re getting ready to buy a home or apply for a credit card, give your credit reports a lookover before you apply to ensure you have the best credit score possible.