Credit reporting industry oversight praised

In the last several months, more attention has been paid to just how much consumer information credit reporting companies control, and the ways in which that data is used. Now, experts say that the government taking a larger role in dealing with these firms is potentially a very good thing.

The federal Consumer Financial Protection Bureau recently announced it would take larger participants in the credit reporting industry under its purview, meaning that it would gain regulatory control over the ways in which these companies dealt with consumers, at least on some level, according to a report from the Washington Times. As a result of this decision, it’s likely that borrowers will receive more significant protections from inaccurate or misleading information that’s placed on their credit documents.

A problem with the current system?

Today, many experts believe there is relatively little accountability in the credit reporting industry at large, the report said. This is because while these companies collect massive amounts of information about consumers’ finances and other aspects of their lives, those people are not the agencies’ intended customers. While borrowers can buy copies of their credit scores, and other related products, from credit reporting firms, the companies larger customers by far are financial institutions and other parties that run credit checks on consumers.

For this reason, it’s not always in the best interest of a credit reporting firm to make sure they have the most accurate information on a borrower, the report said. And because of that, in many cases, consumers who do take the time to order a copy of their credit report, and discover a mistake on it, can have some amount of difficulty resolving the issue directly through the company that issued the document.

“[Credit agencies] slice and dice our credit information,” consumer expert Clark Howard told the newspaper. “Their only real objective is to package and sell, without an interest in [ensuring] that the information is wholly accurate.”

Troubling statistics

Several studies have highlighted just how pervasive the issue of incorrect data being listed on a credit report has become in the last few years, the report said. Perhaps the most shocking was one from the U.S. Public Interest Research Group, which found that 79 percent of all credit reports were inaccurate in some way. Another 25 percent or so had unfair markings so severe that it could result in a would-be borrower being denied credit to which they should have otherwise had access.

And the issue many consumers who do notice these troubling entries on their profiles will likely find these days is that credit reporting agencies don’t always make it easy to dispute these markings, which can take months to clear up, if at all. In the process, that can delay potential borrowing efforts that may be crucial to consumers’ financial wellbeing.

Help coming

Fortunately for consumers, the CFPB is now accepting complaints about the larger participants in the credit reporting industry, the agency announced in late October. As such, consumers who cannot resolve these issues with the companies that issued inaccurate reports can go to the federal watchdog to report issues with the information itself, the investigations into their claims by the companies, parties using their reports improperly, inability to get credit-related documents, and even problems with related services.

The CFPB’s oversight will include all companies with more than $7 million in annual receipts, the report said. In all, that only affects about 30 companies in the entire industry, but those organizations also take in about 94 percent of all business in the field every year.

Having fair and accurate data listed on a credit report should be of the utmost concern to consumers, because unfair markings on such a document can have a serious negative effect on not only their credit, but also their overall finances. For instance, having a credit score lower than it should be may not only make it so that potential borrowers might be denied for a line of credit they want, but even if they are approved, they can receive less beneficial terms on the agreement, and therefore end up paying more for it.

One way in which consumers can do more to protect themselves from such an issue is by taking the time to order a copy of their credit report. Doing so will allow them to check it closely for any unfair markings that have the potential to mar their credit rating, and therefore put them in a worse position financially. Fortunately, working with a credit repair company may be able help to resolve these issues, and put borrowers back on the right path to where their credit should be.

Posted in Finance
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