CFPB Report Highlights Why Consumers Need to Check Their Credit Report
WASHINGTON, DC — The Consumer Financial Protection Bureau (CFPB) today released a report that examines how the three largest nationwide credit reporting companies – Equifax, Experian, and TransUnion – manage consumer data and compile your credit report.
The report sheds a light on industry practices that ultimately shape consumers’ financial report cards. Consumers Union, the policy arm of Consumer Reports, welcomed the report and noted the importance of credit reports to the financial health of consumers.
“For years we have been saying that we need to take the mystery out of credit reporting,” said Pamela Banks, senior policy counsel for Consumers Union. “Your credit report is critical to your financial future because lenders use it to make big decisions about you, like whether to approve you for a loan. The report helps consumers understand what goes in to their report so they can be smart about how they handle their credit.”
The report notes the dominance of credit card history found in the typical credit report, with most information in credit reports coming from a few large companies and financial institutions. And while the report also found that more than a third of disputes about credit report accuracy have to do with collections, only one in five consumers obtain copies of their credit report each year – the easiest way to identify errors and have them corrected.
Banks said, “It is especially concerning that so few consumers are getting their free credit reports every year. Often times the only way that a consumer will find out that there is an error is after they’re denied credit, which could easily be avoided by routinely checking your report and disputing errors.”
Consumers Union has a page at www.consumersunion.org/creditreport with information on how to get your free credit report, how to fix mistakes in the report, and why it’s so important to check yours every year.
However, as important as a credit report is, Consumers Union points out that there is one thing missing from that report – your credit score. And while consumers can currently pay to get their score, a previous report by the CFPB found that one in five consumers would be likely to receive a meaningfully different score from the one sent to a lender.
“Many consumers might assume that the report includes your score, but it doesn’t," Banks said. "Even worse, the score you pay for may not be the same score that businesses are using to make decisions about you and your finances. Consumers need access to a reliable score and they shouldn’t have to shop around for the best deal and hope that it’s an accurate score.”