The Consumer Financial Protection Bureau plans to oversee the three major credit reporting agencies thanks to a surprising number of discrepancies and incorrect information in individual reports over the past several years.
Many consumers are finding that their personal credit histories do not accurately reflect who they are, how responsible they are, where they lived, or even whether or not they are alive. This is in light of many complaints and requests by consumers for the national credit reporting agencies to repair these discrepancies. What is, perhaps, more frustrating is that on some occasions these credit reporting agencies will require somewhat excessive processes just to prove, for example, that you are alive.
Carol Long, a housing counselor for a Detroit Nonprofit, lives in Grand Blanc Michigan and she constantly encounters these kinds of problems via clients of her company. She says
The credit bureaus keep saying how accurate they are and that very few people have errors on their credit reports, but look at the hoops I had to jump through. At my job clients come in every day saying something is wrong on their credit reports.
The “hoops” she mentions refers to the process she underwent to correct her credit report which said that she was deceased. TransUnion took her phone call and went straight into action to fix the misinformation. Experian, however, required that she write a letter explaining that she had not died and have the bank notarize it before sending it to them. Even after sending this letter, though, the problem was not immediately remedied. She had to continue to hound them before the proper changes were made to her account.
These new changes come at a most opportune time for American consumers. The three major credit bureaus really have a lot to do with whether or not you qualify for a new credit card, a new car, or a new home. This is a powerful organization that is basically run by machines. Lacking human discernment, these machines quite often make mistakes so it is not far-fetched to imagine that occasionally something will be misspelled or numbered improperly. Also, consumers move, get new jobs, apply for new cards, etc, all the time and with every change in one person’s history, the more complicated the tracking becomes.
This is precisely why Dodd-Frank Wall Street Reform was necessary and why enacting the Consumer Protection Act led to the development of the Consumer Financial Protection Bureau. Ed Mierzwinski, Consumer Program Director of U.S. consumer advocacy group PIRG says:
There are thousands of banks, but only three major credit reporting agencies. Those three are the gatekeepers to your ability to get a job and qualify for credit at a fair price, which are contingent on having a good credit report. We’ve found credit bureaus make mistakes that are nearly impossible to fix because the process is run by machines. Now the CFPB has the authority to look under the hood.
This new measure, actually, intends to use the CFPB to watch over at least $7 million in annual receipts. This represents approximately 30 credit companies that account for more than 90 percent of the entire credit reporting market. Obviously, this also includes Equifax, Experian, and TransUion, which track more than 200 million Americans’ files combined. If that isn’t enough, though, the CFPB is also slated to oversee several dozen smaller, specialty, consumer reporting agencies. These specialty companies handle things like collect information on insurance claims, checking accounts, payday loans, and other such financial products.
ChexSystems is one such “smaller, specialty” company that fits this description. U.S. banks use ChexSystems to screen potential checking account customers for responsible banking history. Mierzwinski comments that this is the benchmark for “negative-only” credit reporting because ChexSystems will only list your name if you are a potential risk.
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