Pandemic brought record consumer complaints about credit bureaus
The three biggest credit reporting agencies caused more angst for consumers last year than even old standbys like debt collectors, a new study finds.
As the pandemic shredded the financial picture for many Americans, complaints about the behavior of financial companies to the Consumer Financial Protection Bureau more than doubled in 2020. That's according to the U.S. PIRG Education Fund, which studied grievances lodged with the CFPB last year.
Complaints about problems with financial companies spiked more than 50% to 444,551 in 2020, with more than half of the grievances lodged with the CFPB made against Experian, TransUnion and Equifax, according to the analysis.
Nearly nine in 10 credit reporting complaints involved one of the big three credit bureaus, with Experian drawing 86,600 complaints, TransUnion 83,300 and Equifax 76,300, according to the findings released on Monday.
Of the 282,000 credit reporting complaints, the majority involved trouble with "incorrect information on your report," and most of the gripes had to do with troubles tagged as "information belongs to someone else." In addition to faulty information, the second and third most complained-about issues dealt with a credit bureau's handling of the problem and debt collectors trying to collect debt not owed.
The findings echo a report issued by PIRG last year, when the advocacy group found half of CFPB complaints involved the credit agencies.
While not new — the Federal Trade Commission in 2012 found one in five Americans had an error that was corrected by a credit reporting agency after it was disputed on at least one of three credit reports — the mistakes can be costly.
The big three credit reporting bureaus gather data on the credit histories of consumers, which they sell to lenders and other businesses that want to assess potential customers. But the data is also invaluable to scammers, who can use it for identity theft or other criminal activity.
Case in point: Equifax in 2019 agreed to pay up to $700 million to settle with the FTC and others over a massive data breach two years earlier that exposed the private data of nearly 150 million people.
Lower scores, denial of credit
Errors in credit reports also can mean lower scores and denial of credit, housing or employment.
In issuing its report, U.S. PIRG called for reforms including improving the dispute process for errors in credit reports, broader access to free credit scores and a requirement that credit bureaus get consumer consent before giving a third party access to credit reports. The advocacy group also urged holding companies accountable for faulty information by imposing fines.
Finally, the group is promoting a proposal that would replace the credit bureaus with a public credit registry.
Francis Creighton, president and CEO of the Consumer Data Industry Association, responded on behalf of the credit bureaus, defending their reports as having an accuracy rate of 97%.
"The industry's internal data indicates there is no evidence that complaint activity reflects a problem with credit reporting," Creighton said in an emailed statement.