More than half of consumer complaints to the CFBP have been about the big 3 credit bureaus in the past 2 years, according to this Washington Post Article. So much so, that the Washington Post slams the big 3 credit bureaus again just 2 days later discussing why it’s so hard to get errors fixed on credit reports.
Both articles cite this report by the CFPB, detailing the deficiencies in response to consumer complaints and disputes. In the credit repair industry, we are seeing ignored or unanswered disputes, no reinvestigations, or sloppy reinvestigations. This is leaving many consumers and credit repair companies alike, scratching their heads. Many think the prospect of getting errors fixed or deleted from credit reports are about impossible right now, but in reality it is not. We will discuss why, and give options and suggestions to tackle this very issue.
Why Aren’t The Credit Bureaus Investigating Or Responding?
Derek Louw of Consumer Credit Auditors, a good friend of ours at Credit Wellness Solutions has said, “I’ve been in this business for over 25 years, and I’ve never seen the bureaus ignore or not reinvestigate disputes like they are right now.”. Before I proceed to
throw the credit bureaus under the bus, I do want to throw them a bone on one potential reason. Obviously, the COVID-19 pandemic has caused at least some of this issue. With the spread of the virus, and lockdowns worldwide, I know they have been short staffed, likewise identity theft has increased with increased online shopping, and consumers being more credit aware than they have been in the past created the perfect storm for the credit bureaus. However, that excuse has about if not already ran it’s course with the virus becoming less deadly as it mutates for its own survival. The credit bureaus wanted to immediately blame the credit repair industry for their backlog of disputes, claiming many are frivolous. That could be further from the truth. Only a small percentage of the population are aware of their credit, an even smaller percentage know anything at all about the dispute process, and even smaller are consumers who have used a credit repair company.
Data Furnishers (anyone that reports information to the credit bureaus) are not without blame either. Personally we have seen where the furnisher may fix one or two issues pointed out on a dispute, but leave the rest of the errors. Another trick the bureaus
and data furnishers are pulling is the blame game. They point the finger at one another, blaming the other for the errors and telling the consumer to dispute with the other party. Truth be told there is no such thing as an accurate credit report. That’s another article for another time, but we do touch on that topic in our very first blog post. Here is a list of actual reasons why we think consumer disputes are being ignored, or if they are investigated, why the investigation is sloppy:
- Statutory Damages Are Only $100-$1,000 Per Violation – The Fair Credit Reporting Act (FCRA) was first enacted in 1970. While it has been amended numerous times, there have been no adjustments for inflation since. So even if they are sued it doesn’t cost them hardly anything. A strong grassroots and lobbying effort needs to be made to Congressmen and Senators to adjust these numbers to inflation.
- You Have To Prove Willful Harm To Get Statutory Damages – You can get Actual Damages (ex. turned down for a mortgage, higher down payment or interest) with negligence, that’s easier to prove than willful harm.
- Most Attorneys Will Not Take A Case With Statutory Damages Only – This is an area caused by reasons number 1 and 2. The bureaus and data furnishers know these facts and exploit consumers further. The real truth is you can find anywhere between 5-15 credit reporting problems per tradeline (you heard me right per tradeline, not the entire report but 5-15 issues per item!) If only it were seen from that perspective 5-15 issues per tradeline on a credit report, those issues/violations add up fast on an entire credit report. The case can be made that ignoring disputes that plainly point out every inconsistency, error, and omission being a squeaky wheel by giving them multiple opportunities to fix or delete, should in fact push your case from negligence to willful.
- Common Misperception Of The Ramirez Supreme Court Case – The perception of this case claims there is legal precedence that you can’t sue for simple credit reporting errors. The fact is Federal level court can’t assess statutory damages, however State level court can. So essentially keeping these cases in State level court is how you can get statutory damages for simple credit reporting errors.
- The Current Economy And Housing Market – With inflation at a record rate, housing is becoming more and more unaffordable. Lenders know this. They also know that the risk of default remains the same (in their eyes) if a credit score is “artificially inflated” as a result of deletions from disputes. It would not surprise me if the big banks are slipping the bureaus extra money to keep credit scores beat down.
- Most Disputes Never Make It To Court – A very small percentage of consumers are aware of their credit, an even smaller percentage dispute items on their credit report, and an even smaller percentage seek professional help or legal help with their credit. So what does it cost the bureaus if a lawsuit or two slip through the cracks? The credit bureaus and these banks have plenty of money, so a lawsuit or two is no big deal to them.
What can be done about the credit bureaus ignoring or not investigating disputes?
While it may seem hopeless, you still have options to hold the credit bureaus and data furnishers accountable for reporting fairly and accurately. Every American is deserving of a fair and accurate credit report. Your financial reputation depends on it. A credit report affects every aspect of your financial life. Here is a list of options, possible
options in the near future, and resources available to you. Ultimately, the more consumers who stand up to the credit bureaus and data furnishers, the better chance we have to force them into compliance with all current laws and regulations, and perhaps stiffen regulations and penalties for violating your right to a fair and accurate credit report.
- Consult With A Credit Service Professional – A credit service professional, especially someone with extensive knowledge in pre-litigation. They know the ins and outs of credit reporting and Metro2 compliance. Credit Wellness Solutions and Consumer Credit Auditors are a couple examples. They can point you in the right direction.
- Consider Arbitration – Many creditors have arbitration clauses. If you have kept good record of your communications (sent and received) showing you have clearly identified the errors and issues and after more than one occasion of the item not being fixed or deleted, it is possible arbitration could be a good route to consider to have your issues resolved.
- Submit Complaints – As the old saying goes, “The squeaky wheel gets the grease”. Also by submitting complaints to the CFPB or the Better Business Bureau. In fact the increase of consumer complaints is already getting the CFPB’s attention as seen earlier. Perhaps more complaints will lead to meaningful action, rather than publishing press releases.
- Apply For Credit – This may sound crazy, but getting denied for a mortgage or other loan after you have disputed errors on your credit report can create “Actual Damages” which attorneys are more willing to take your case.
- Find An Attorney That Will Sue On Basic Credit Reporting Errors – While most attorneys won’t sue on basic credit reporting errors, there are some that do. While finding them can be like finding a needle in a haystack, you can look at court cases via Pacer and find cases where an attorney that has, and contact them.
Future Options You May Have
Wouldn’t it be nice to find errors on your credit report you didn’t know were there? Metro2 is the credit industry’s standard for meeting the requirements of the FCRA’s “Maximum Possible Accuracy” mandate. Metro2 is comprised of multiple fields that go into reporting an account on a credit
report. Currently software exists for credit repair professionals and consumers that will find errors on a credit monitoring credit report like Smart Credit, or My Score IQ and generate dispute letters. The problem is, credit monitoring reports are typically dismissed as hearsay because the data isn’t directly from the source. Even if you have credit monitoring from one of the credit bureaus, the data from the other two did not come from the source. This is why when disputing errors on a credit report, it is highly recommended that you use the credit monitoring and the existing software only as a guide. Currently no software exists that can get credit data from the credit bureaus directly. This means you have to obtain that data from Annual Credit Report and find the errors, omissions, and inconsistencies manually. This is extremely time consuming and also takes full knowledge of Metro2 to know what fields are required based on the circumstances of the account.
A Change Is Brewing…
I won’t go into great detail about this as the Credit Bureaus will want to squash any effort to get it off the ground. But there is development to make a software capable to getting credit data directly from the credit bureaus and generate solid factual dispute letters pointing out every error, omission, and inconsistency amongst the Credit Bureaus. It will be made available to consumer protection attorneys, credit repair companies, and consumers. It will streamline the process of credit report auditing and disputing which may in turn entice more consumer protection attorneys to take on simple credit reporting cases without actual damages, especially if they see how many errors, omissions, and inconsistencies there are on credit reports. Even positive accounts are wrought with errors, so this goes way beyond someone just trying to get negative accounts removed from credit reports. This project will also unite credit repair companies and consumer protection attorneys, and increase access for consumers to a vast network of attorneys. I am also forecasting that more attorneys will begin to practice consumer law, especially FCRA cases once this is developed and released. Eventually, this will do one of two things to the credit bureaus. Either force them into compliance with the FCRA, or they go broke with all the lawsuits. Either which, with Consumer Information Accountability, it will be an exciting time for consumers, credit repair companies, and consumer protection attorneys alike. Every consumer is entitled to fair, accurate, and timely credit reporting.
