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Accurate credit reports?  It is time to find out.

Posted by Brett D. Sherman | May 07, 2021 | 0 Comments

Savings? Check.  Investment Portfolio?  Check.  Accurate credit reports?  It is time to find out.

The Consumer Financial Protection Bureau (CFPB) reports that it received and addressed more than 200,000 consumer complaints related to incorrect information on credit reports and/or complaints about issues with investigations and business practices by credit reporting agencies (i.e., Equifax, Experian, and TransUnion). See, for example, page 23 of the 2020 Consumer Response Annual Report, linked here.

Imagine how staggering a problem truly is baked into the credit reporting system based on (1) the sheer volume of the complaints received and addressed in 2020 by the CFPB and (2) the fact that just a fraction of the public actually checks their Equifax, Experian, and/or TransUnion credit reports with any degree of regularity.  

There is a lesson you can learn here, and it is this -- Regularly reviewing your credit reports with Equifax, Experian, and TransUnion (something with which we can assist you at no cost) is an essential element of maintaining your financial fitness.

Knowing whether your credit scores accurately reflect your creditworthiness is as important as making sure your savings are secure and your investments are sound. Imagine, for example, that you believe you have excellent credit and need to take advantage of low interest rates to take out a home equity loan or line of credit in order to pay your child's college tuition. Now, imagine how you would feel to learn when applying for what should be guaranteed low-interest credit that your application is denied because Equifax, Experian, and/or TransUnion has mixed your credit file with that of another consumer who has poor credit. Or that your credit application is denied because the credit bureaus are incorrectly reporting that you have a series of late payments on your car lease. We could provide dozens of other, similar examples.

The point is that there are many scenarios in which inaccurate credit reporting can and does leave potential and qualified borrowers without access to credit (as well as leaving those same people embarrassed and wracked with anxiety). It is a systemic problem that we at Sherman & Ticchio believe is viewed by the massively profitable credit bureaus and the companies that report to them -- many of which are behemoth banks with multibillion-dollar balance sheets -- as a simple part of doing business as usual. 

Rather than spending the money required to assure maximum possible accuracy of the information that they report about you, which is what the Fair Credit Reporting Act (FCRA) requires, the credit bureaus are willing to report inaccurate information because it is cheaper than having enough checks and balances to assure accuracy. Worse, these same companies know that you don't check your credit reports (or that not many of you do).  And so, while they know they will be sued pursuant to the FCRA by a certain number of consumers each year, the credit bureaus and furnishers of information to them also know that the amount they pay out each year because of lawsuits stemming from inaccurate credit reporting is dwarfed by the profits they make using their deficient systems. These companies -- principally Equifax, Experian, and TransUnion -- also know that the number of people who will sue them each year is dwarfed by the number of inaccuracies for which they are responsible.

It is a badly broken system. What can you do about it?  As we advise consumers all the time, closely monitor what the credit bureaus report about you.  At Sherman & Ticchio, we are happy to help you obtain, review, and understand your credit reports for free. And we are equally happy to provide free advice to you about how to dispute errors on your reports. Bottom line?  Feel free to contact us at any time.  We are here to help.

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