Why Credit Bureaus Are in Hot Water With Unhappy Consumers

It is possible you will have to fight credit reporting agencies to clean up their mistakes.

In January, the Consumer Financial Protection Bureau (CFPB) released a report detailing how unhappy consumers are with the big three credit bureaus – Equifax, Experian, and TransUnion.

What's the complaint?

According to CFPB, consumers submitted more than 700,000 complaints regarding credit reporting agencies between January 2020 and September 2021. In fact, more than 50% of all complaints CFPB received during that period involved Equifax, Experian, or TransUnion.

Inaccurate information on their credit reports was the top complaint. Consumers say they were met with frustration when they reported incorrect information to the credit bureaus, with very few complaints being treated seriously.

After looking into the issue, CFPB found less than 2% of complainants received relief in 2021. That's down from the 25% who found relief to problems with their credit reports in 2019.

A real problem with the credit bureaus

There's no denying the role a credit report plays in a consumer's life. A poor credit report can prevent a person from taking out a loan when they need it. It can also prevent them from landing a job, buying auto insurance, renting an apartment, having utilities turned on in their name, or starting a small business. In other words, adverse credit can haunt their everyday lives.

Equifax, Experian, and TransUnion are profit-churning businesses that make money by selling credit reports, offering expertise to other companies, and selling credit-related products. The fact that less than 2% of the 700,000 consumers who complained last year found any relief indicates deep-seeded problems with the agencies.

At the heart of the matter

According to Rohit Chopra, CFPB Director, a lack of competition may be at the heart of the way credit reporting agencies disregard consumer concerns. Chopra said, "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."

The CFPB found the big three frequently failed to provide satisfactory responses, particularly when a third party sent complaints. This is despite the fact consumers have a legal right to authorize a third-party representative to submit a complaint on their behalf.

Other major findings

Overall, the 700,000 consumers who turned to the CFPB for help said the consumer reporting system in the U.S. is not working for them. Even when they find information that is -- by law -- supposed to be removed because the reporting agency cannot verify that it is correct, that negative information remains on their report. Here's more of what the CFPB found:

• The big three commonly fell back on the excuse that a third party submitted a complaint as the reason they failed to clear up report inaccuracies.
• Despite having up to 60 calendar days to respond to a complaint, all three reporting agencies relied on template complaint responses. In other words, they did not provide concerned consumers with a thorough (or meaningful) response.
• Equifax and TransUnion often promised to investigate and provide the CFPB with their findings, but instead, they forwarded complaints to a "dispute channel."

Read more: What Information Is on a Credit Report?

What you can do

Unless you're lucky enough to be one of the 2% helped by a credit reporting agency, you have several options. If there is a mistake on your credit report that one of the big three refuses to remove, contact the CFPB in one of these three ways and let them know what's going on with your file:

• Online: www.consumerfinance.gov/complaint
• Phone: (855) 411-CFPB (2372)
• Mail: Consumer Financial Protection Bureau P.O. Box 4503, Iowa City, Iowa 52244

Also, file a complaint with your state Attorney General. Chances are, with so little competition, credit reporting agencies are not going to make changes until they are required to by law.

Finally, hire a lawyer who is experienced in handling Fair Credit Reporting Act (FCRA) cases. You can find a list of lawyers handling FCRA cases at the National Association of Consumer Advocates website. At the top of the page, click on the "Find an Attorney" tab. Under "Areas of Practice," click "Credit Reporting."

There's no reason to suffer from an inaccurate credit report. Consumer credit reporting agencies must provide accurate information and rid reports of mistakes. Unfortunately, it appears consumers must push them to do the job correctly.