Published: January 2009

Reasons you can’t get your credit report fixed

A noted national consumer law organization releases a report documenting the abysmal quality of the credit report dispute system provided for by law to protect consumers from errors in their credit reports.

The National Consumer Law Center (NCLC) has issued an important new report on the credit reporting industry’s failure to handle errors in credit reports. While consumer advocates have long realized the problems that plague the system that gives consumers the legal right to correct errors in their credit reports, the NCLC report provides important documentation. (Click here to read the report in PDF format.)

The NCLC report, titled “Automated Justice,” details how inaccuracies and errors continue to compromise the credit reporting systems, with estimates of serious errors ranging from 3% to 25%. The errors mean that 6 million Americans (or more) face serious errors in their reports that could result in a denial of credit. 

The NCLC points out that typical errors include:

• Credit bureaus mixing the files and identities of consumers.
• Creditors causing mistakes by attributing a debt to the wrong consumer or incorrectly recording payment histories.
• The fallout caused by identity theft.

Forty years ago, Congress enacted the Fair Credit Reporting Act to protect consumers from errors in credit reporting.  One of the most important safeguards in the FCRA is the requirement that credit bureaus conduct a reasonable investigation when consumers dispute inaccuracies in their credit files. Unfortunately, the FCRA dispute process has become a travesty of justice, with major credit bureaus (Equifax, Experian, and TransUnion) conducting investigations in an automated and perfunctory manner.

NCLC points out how the bureaus:

• Translate the detailed written disputes submitted by desperate consumers into two or three digit codes.
• Fail to send supporting documentation to creditors and other information providers (furnishers) as required by the FCRA.
• Limit the role of their employees who handle disputes, or of the foreign workers employed by their offshore vendors, to little more than selecting these two or three digit codes. Workers do not examine documents, contact consumers by phone or email, or exercise any form of human discretion in resolving a dispute.

Furnishers, the companies that provide data about their customers’ use of credit to the bureaus, are just as bad, according to the NCLC report. While the law is clear that furnishers are responsible for correcting inaccurate information, some furnishers continue to conduct meaningless, non-substantive investigations. The NCLC charges that furnishers’ “investigative” activity consists of nothing more than comparing the notice of dispute with the information that is itself under dispute, and the credit bureaus just rubber-stamp whatever the furnishers decide in resolving the dispute.

The NCLC believes that credit bureaus have little economic incentive to conduct proper disputes or improve their investigations because consumers are not the paying customers for credit bureaus – furnishers are the ones who pay the bureaus’ bills.

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Filed Under

Congress   ♦   Consumer Protection   ♦   Credit   ♦   Credit Cards   ♦   Privacy/rights   ♦  

Comments

 
1. On 08/03/2009, Linda Jensen says:

   Our credit suffers from a time of severe hardship and health problems. Under employed for a long time and both of us had serious health issues so we got behind on payments. he has had life threatening emergency illnesses twice, I have have been uninsured and had medical problems that cost us more than we could afford to pay.

   My husband is 69 and I am 62 years old. At one time in the 8o’s we had excellent credit and good jobs.

   Wells Fargo called us and asked us to settle our vehicle note and told us that if we paid right then it would not go against on our credit. They lied and the same thing happened with our credit card HSBC account. We had struggled to make payments then they told us that if we settled and closed the account we would save a bad mark on our credit. Another lie.

   The State of Maryland had a file on us from 1986 for taxes they said we owed. We proved that we didn’t owe it and we resloved the matter and had it removed from all three credit reports, it came back twice, it is back again. I have sent a copy of the Notice of Compliance Case Closure dated Jan 2004 to all three credit companies, they still hold it against us. We never owed the taxes and we sent the Comptoller’s office the proof they requested.

   We had a bankruptcy it took longer to get off and sometimes still shows up. 1996 or 1997.

   Some how old information is still on our accounts that should be long gone. Why? They are crooks. It is hard enough to live without having to deal with the three credit reporting agencies all having differnt stuff and messing up things, who has time for all this. I think it is a giant rape of the American people.