Consumer Financial Protection Bureau issues first report on credit bureaus

The Consumer Financial Protection Bureau (CFPB) released its first report on the major credit bureaus since it expanded its jurisdictional reach in July.  The major credit bureaus are Equifax, TranUnion and Experian.

As expected, your credit report history is comprised mainly of credit card history and debt collection items generate the highest rate of credit disputes.

As leaders in the credit repair industry since 2003, we at YourCreditAttorney can attest to many of the take-aways from this report.  We also agree with the statement by CFPB Director Richard Cordray who states “If consumers know how these companies handle their credit histories, they can make better decisions on how to handle their financial lives.”

The credit bureaus have files on more than 200 million consumers, yet only receive updates from 10,000 data furnishers, primarily credit card companies.  These 10,000 data furnishers report on more than 1.2 BILLION trade lines each month.  The opportunity for problems is in fact tremendous, when 10,000 companies providing 1.2 billion data points on 200 million Americans has been so far nearly un-regulated.

Here are a few of the more important parts of the report:

  • The credit card companies supply more than half of the 1.2 billion data points monthly to the credit bureaus.  Only 7% of the information comes from mortgage lenders and servicers, and 4% from auto lenders.
  • Collections disputes make up more than 33% of all disputes. Unsurprising to us, this extremely dangerous and virtually unregulated sub-set of the financial world who are sloppy and cavalier in their reporting, often reporting as a tactic rather than a fact, generate 33% of the disputes of consumers looking to repair their credit from malfeasance and errors.
  • Only 20% of consumers obtain copies of their credit reports each year.  One of the most important things you can do as a smart consumer is to review the information within your credit reports on a regular basis.  Yet, only 1 in 5 Americans does so on even an annual basis.  Without knowing what information the bureaus are reporting, you have no idea if there is a problem that you need to address.  Our recommendation is that every consumer obtain and review your reports on a regular basis for any anomalies and errors.
  •  Most data comes from a very small number of furnishers.  Although 10,000 companies report to the bureaus credit history and information, just 10 furnishers provide 57% of the 1.2 billion trade-lines, and 72% of the total is provided by just 50 companies.  This is a lot of power in the hands of just 50 companies!!!!
  • Credit repair disputes are not fully forwarded to furnishers.  Even more alarming is that for many consumers who choose to do credit repair without the assistance of a professional, that in a significant number of cases, additional documentation sent to the bureaus as evidence of an unjust reporting are not even forwarded to the original data furnisher.  This is a complete act of negligence on the part of the bureaus, and one that should not be tolerated.

The complete report can be downloaded here.

If the findings in this report appall you, please leave your comment below.

Of course while it appalls us, we unfortunately, already knew much of the information presented.  In helping tens of thousands of consumers who have been harmed by the bureaus with credit repair since 2003, we are all too aware of the negligence of the bureaus, yet also know how to best navigate the process to achieve the best results possible for our clients.

 

About Anthony Candella

Anthony is the founder and Directing Attorney of YourCreditAttorney.com and has been helping consumers just like you understand and improve your credit and financial situation since 2003.