The January 2015 issue of Consumer Reports has an excellent article on credit reports. It is especially useful for any consumer who discovers a problem with his or her reports, but does not know how to begin to fix the problem. The article has specific advice on how to dispute errors in the reports. It also describes what goes into consumers’ credit scores and ways to rehab your credit score.
Last night, Michael Finney of Channel 7 in San Francisco interviewed our client Lisa Allen about her experience with the credit reporting agencies. When Lisa was just a child, the Social Security Administration mistakenly gave her social security number to the guardian of a another Lisa Allen who lived in another state. The mistake occurred because their names were the same and their birthdays were only ten days apart. As the two Lisas went through their teen years, Experian, Equifax and Trans Union mixed their credit files meaning the other Lisa’s credit files were mixed with Lisa of Fremont’s files.
To make matters worse, the other Lisa’s credit was terrible with a foreclosure, a repo of a car, and numerous bad debts. Beginning in 2008, Lisa of Fremont began asking the credit agencies to unmix her file. She got nowhere with Experian and Equifax. Trans Union unmixed her file but only after years of its report impacting her ability to get credit. The effect of all this mixing was that Lisa could not get credit in her own name. We filed the a lawsuit in in the federal court in San Francisco alleging violations of the Fair Credit Reporting Act. The case settled in 2013. For the Channel 7 interview go to www.abc7news.com.
Many of you know you can get free credit reports once a year from Experian, Equifax and Trans Union by going to annualcreditreport.com (or you may call 1.877.322.8228 and use the prompts). But what you may not know is that there are quite a few other credit-related reports you may obtain that relate to your credit standing. These reports may be useful in checking for ID theft or the source of inaccuracies in your credit history. Some of the more useful reports are as follows:
1) Public Records. LexisNexis Personal Reports contain information on public records relating to property you have purchased or sold, criminal history, liens and bankruptcy. You may request a copy of your LexisNexis report by sending a request via www.personalreports.lexisnexis.com or you may call 1.866.312.8102 for information on how request your report.
2) Check Writing History. Banks report bounced checks to three companies. You may get your Chex Systems report by calling 1.800.428.9623 or go to ConsumerDebit.com. You may get your Certegy Check Systems report, by calling 1.866.543.6315 or go to askcertegy.com. For TeleCheck call 1.866.543.6315.
3) Health Care. Call The insurance industry reports health related data to the Medical Information Bureau. To get your report, you may call 1.866.692.6901 For prescription histories call Milliman IntelliScript at 1.877.211.4816 or go to rxhistories.com or call Optum MedPoint at 1.88.206.0335.
4) Insurance Claims. LexisNexis has reports on auto and property loss claims, the Lexis/Nexis Comprehensive Loss Underwriting Exchange (CLUE). There is also a similar report available from Verisk-A-Report, 1.800.627.3487 or go to verisk.com (type “order free report” in the search box).
5) Rental History. CoreLogic has rental histories. Call 1.888.333.2413 or go to corelogic.com/landing pages/Safe-Rent-Consumer.aspx.
These companies are subject to the Fair Credit Reporting Act in many respects. Under the FCRA, they are required to give you your report at no charge once a year.
For a complete list of companies that produce speciality reports go to the Consumer Financial Protection Bureau’s website, cfpb.gov, and then search for “consumer reporting agencies.”
The Consumer Financial Protection Bureau today announced that If you’re trying to correct an error in your credit report at one of the nation’s largest credit reporting companies, there is some good news. Recently, Equifax, Experian, and TransUnion added a function to their online dispute-handling systems that allow consumers to upload supporting documents such as a paid bill, letters, a police report, or proof of identity information to help explain their disputes.
Millions of Americans dispute errors in their credit report. In 2011, Equifax, Experian, and TransUnion together received about 8 million requests disputing the accuracy of information in credit reports.
Upon receipt of your dispute, the credit reporting agencies are required to send dispute to the furnisher, such as a bank or debt collector that reported the credit information to the agencies. Both the furnisher and agency are required to conduct reasonable investigations in this process of the consumer’s dispute. .
The Consumer Financial Protection Bureau had made available a consumer complaint database that tracks complaints made by consumers to the CFPB and how they are resolved. The database includes consumer complaints about credit bureaus with the aim of uncovering patterns in the problems consumers are experiencing with credit reporting.
U.S. PIRG, a consumer group, analyzed the data and made this report.
Since the Consumer Financial Protection Bureau began collecting complaints about credit reporting in October 2012, the CFPB has recorded more than 10,000 complaints about credit reporting. Equifax, TransUnion and Experian were the subject of 96 percent of all consumer complaints. Experian was the subject of 38 percent of consumer complaints to the CFPB about credit reporting, Equifax was the subject of 33 percent, and TransUnion was the subject of 25 percent.
25% of consumer’s complaints were about incorrect account information appearing on their credit reports. 20% of the complaints were about accounts the consumers said did not belong to them.
Some 30% of the consumers received money or other relief (such as correcting their credit reports) from the credit bureaus through the CFPB complaints process. Other consumers were closed with an explanation to the consumer. Equifax was most likely to provide non-monetary relief while Experian did so in only 5% of cases. Trans Union offered non-monetary relief in 22% of cases. Consumers continued to dispute the companies’ responses to 18% of the complaints.
Today, the Consumer Financial Protection Bureau warned furnishers of credit and credit bureaus that they must improve their methods of investigating consumer disputes. Specifically, the Bureau states that the credit bureaus must send documentation to the furnishers, which is something they never do. However, probably under pressure from the Bureau, the bureaus have said they would begin to send documents to furnishers as part of the dispute process.
Here is the text of the Consumer Bureau’s announcement:
The Fair Credit Reporting Act (FCRA) generally requires a consumer reporting
agency (CRA) to notify a furnisher when a consumer disputes the accuracy or
completeness of an item of information provided by the furnisher to the CRA.1
The CRA must also promptly provide the furnisher “all relevant information”
regarding the dispute that the CRA timely received from the consumer.2 The
furnisher, in turn, must “conduct an investigation with respect to the disputed
information,” “review all relevant information” provided by the CRA, and
respond appropriately based on the result of the investigation.3 The CFPB
expects CRAs and furnishers to comply fully with these FCRA requirements,
thereby promoting the accuracy and completeness of information in the
consumer reporting system.
This bulletin specifically addresses furnishers’ obligations to “review all relevant
information” they receive in connection with disputes forwarded by CRAs.
The CFPB expects furnishers to have reasonable systems and technology in place
to receive and process notices of disputes and information regarding disputes,
including relevant documentation, forwarded to them by CRAs. The CFPB also
expects every furnisher to review and consider “all relevant information” relating
to the dispute, including documents that the CRA includes with the notice of
dispute or transmits during the investigation, and the furnisher’s own
information with respect to the dispute.
15 U.S.C. § 1681i(a)(2)(A).
15 U.S.C. § 1681i(a)(2)(A), (B).
15 U.S.C. § 1681s-2(b)(1).2
The CFPB will continue to evaluate compliance with the requirement to review
“all relevant information” by furnishers subject to its supervisory and
enforcement authorities. In general, with respect to disputes received by
furnishers from CRAs, the CFPB expects each furnisher to comply with the
(1) Maintaining a system reasonably capable of receiving from CRAs
information regarding disputes, including supporting documentation;
(2) Conducting an investigation of the disputed information including
a. “all relevant information” forwarded by the CRA and;
b. the furnisher’s own information with respect to the dispute;
(3) Reporting the results of the investigation to the CRA that sent the dispute;
(4) Providing corrected information to every nationwide CRA that received the
information if the information is inaccurate or incomplete; and
(5) Modifying or deleting the disputed information, or permanently blocking
the reporting of the information if the information is incomplete or
inaccurate, or cannot be verified.
Any furnisher not currently maintaining a process that meets these requirements
should take immediate steps to comply with the requirements o
As a consumer, you have a right to ask the credit reporting agencies to delete unauthorized inquiries. Inquiries may have a negative effect on your credit score especially if there a lot of them. An unrecognized inquiry may also indicate your a victim of identity theft.
CreditCards.com has published an article that explains the details. In reviewing your inqurieis on your credit report, you should first determine if the inquiry is a result of a prescreened inquiry. Lenders are allowed to view your credit report without your permission so long as the inquiry is clearly marked as promotional on your credit report. These are called “soft” inquiries and do not affect your credit score. Employers and insurance companies are also allowed to make soft inquiries under some circumstances.
A hard inquiry occurs when you request credit. Hard inquiries may lower your credit score but only slightly, typically by five points or less, for up to 12 months.
If you don’t recognize an inquiry, you may call the company that did the inquiry and ask for more information. The inquiry may be legitimate even if you don’t recognize it. For example, if you apply for a retail store credit card, the inquiry may be from the bank that actually provides the store card. For example, Macy’s credit cards are actually from a bank.
The federal Consumer Financial Protection Bureau has a complaint database concerning credit reporting. Based on the data, the Bureau last week published a report that Experian received almost 60 percent more complaints than TransUnion and 14 percent more than Equifax.
Even worse, Experian offered relief to the consumer just 1.4 percent of the time! That compares to a rate of 24 percent at TransUnion and 55 percent for Equifax..
This data is consistent with the cases I see. Experian only rarely deletes accounts that the consumer disputes, instead deferring to its customers, the banks and other creditors.
The the Big Three CRAs accounted for 97 percent of the complaints to the Bureau.
The bureau’s has collected about 6,700 complaints going back to October 2012.
A FTC study in February found about 20 percent of Americans have an error on their credit report, and about 5 percent had errors serious enough to raise their cost of borrowing.
As the consumer protection bureau said in a statement announcing the publication of the data, “[t]he consequences of errors in a consumer report can be catastrophic for a consumer, shutting him or her out of credit markets.”
Last night, 60 Minutes aired a fine report on the failure of Experian, Equifax and Trans Union to comply with the FCRA’s requirement that they investigate and correct errors in consumers’ credit reports.
Steve Kroft of 60 Minutes traveled to Santiago, Chile where Experian employs most of its credit dispute employees. Three ex-Experian employees, who handled disputes sent by US consumers, told Steve their only function was to reduce the dispute to a two-digit code and forward it to the creditor that made the report and if the creditor said its report was correct, they verified the report to the consumer. They had no authority on their own to change the customer’s report if the creditor said the report was correct. They never contacted the consumer to ask questions and had no way to do so. The were required to handle 90 disputes a day which means they spent about 5 minutes on a dispute!
After interviewing consumers who explained they were not able to get the bureaus to correct errors on their credit reports, Steve Kroft posed as a consumer and called Equifax’ 800 number to resolve a dispute; he was connected to an employee in Mumbai, India, who admitted he had no authority to change a consumer’s report if the creditor said it was correct.
The credit bureaus’ method of dispute resolution saves them tons of money, but does little for consumers.
The 60 Minutes story was based in part on a FTC study released today that found that 21% of consumers had verified errors in their credit reports, 13% had errors that affected their credit scores, and 5% had errors serious enough to be denied or pay more for credit.
The FTC study, which took 10 years to prepare, found that the percentage of serious errors was about 10 times the percentage reported by a May 2011 industry-funded study, which had claimed that only 0.51% of credit reports had errors serious enough to cause the consumer to be denied or pay more for credit. The FTC Chairman said on 60 Minutes that the new study provided “pretty troubling information” and that the error rates were “pretty high”.
CreditCards.com has useful information on the credit bureaus and how they operate. Today’s article is a good description on how the dispute process does not work in many cases.
To dispute an inaccuracy, the consumer must contact the credit bureaus directly. Let’s say the dispute is a bit complicated. The consumer therefore has to explain the facts and may enclose documents proving that the current reporting is in error. What does the bureau do with the letter and documents? They compress it all into a two- to three-digit computer code and a 100-character summary, and send it electronically to the furnisher (usually a creditor or debt collector) via an automated system, where it may be reviewed solely by another computer or someone just looking at computerized, internal records.
However, under the FCRA, the credit bureaus are required to conduct “a reasonable investigation” into the disputed information and remove anything they can’t verify as accurate. The reality, however, is that “the credit bureaus actually spend very little time — only a few minutes, at best — investigating a consumer’s dispute.”