If you saw 60 Minutes this week, then you’re likely not feeling too confident about your ability to successfully dispute items on your credit reports. But the story omitted an important development on the credit reporting front. Last year, the Consumer Financial Protection Bureau (CFPB) began its oversight of the credit reporting industry — the first time the industry has been subject to government oversight. While it remains to be seen what changes the CFPB will make to the inner workings of the credit reporting industry, if you’re not satisfied with the results of a credit reporting dispute, the CFPB wants to know about it.
The gist of the 60 Minutes report is this. Forty million Americans have a mistake on their credit reports, but the current system for filing a dispute is broken. The credit reporting agencies receive your letters of dispute and supporting documentation. They use this information to forward the dispute to the creditor or collection agency. However, letters and supporting documents are not forwarded along, only a code communicating the nature of your complaint. The credit reporting agencies then wait to hear back from the creditor to determine whether the listing is correct. And that, in a nutshell, represents the credit reporting bureaus’ “investigation.” In other words, the people we’re relying on to detect the problem are the same people who generated the listing and who have the most to gain by confirming its accuracy.
Sadly, that’s true. However, as pointed out by commenters on the story, the 60 Minutes report fails to mention the new role of the CFPB in the credit reporting industry. As I blogged in July of last year: CFPB oversight is intended to 1) help ensure the accuracy of credit reports and 2) educate consumers on the importance of checking their credit reports and disputing erroneous listings as necessary.
While there’s no news yet of any major overhauls in the system, the CFPB is actively seeking complaints. If you’re not satisfied with the results of a dispute on your credit reports, submit a complaint through ConsumerFinance.gov.
But mostly what I think is harmful about the 60 Minutes report is that it likely has left millions of Americans feeling hopeless. The fact is, disputes to credit bureaus often do result in the removal of erroneous and/or negative listings from credit reports. Consumers can and should take every step possible to clean up their credit reports, a process that now includes the additional step of complaining to a government agency if and when necessary.
To that end, tomorrow I’ll continue my series of posts on DIY credit repair with step two, sending dispute letters to the credit bureaus.