• DYE CULIK PC | Consumer Protection Division

CFPB’s Plan to Monitor Credit Bureaus

Consumer Financial Protection Bureau (CFPB) is stepping in and will oversee the way these companies operate. The CFPB will be monitoring 30 of these credit bureaus, which make up 94% of the market. This will include the three largest bureaus Equifax, TransUnion, and Experian. These three companies alone report information for more than 200 million Americans. The CFPB will be publishing guidelines and procedures for these companies soon, and will begin on-site examinations in the fall.

Checking Your Credit and What Credit Bureaus Report If you have checked your credit report recently, which you can do for free at least once a year, you probably got a report from Experian, Trans Union, Equifax, or all three. The Fair Credit Reporting Act required that these three companies provide everyone a copy of their credit report, upon request, every 12 months. If you have not checked your score this year, visit Annualcreditreport.com to receive your credit report now. Monitoring your report is the best way to ensure there are no errors that could be costing you money. These companies gather information about how frequently you make payments on time, how much credit has already been extended to you, and some public records like liens and bankruptcies. They then rely on other calculations to come up with your credit score. Creditors, landlords, and even your potential boss (with your permission) can then purchase this information. While a high score does not necessarily guarantee to the lender that you will be able to repay the loan, it does show there is less risk of default.

Mistakes On Your Credit Reprot Mistakes can be made that leave incorrect information on your report. Errors may be caused because the information is about somebody else, there was a clerical error, or the information is incomplete. A creditor may have misread a Social Security number or address on a form, or your payments may have been misapplied causing a negative report.

Errors and How You Can Correct Them The first step is to contact the credit bureau reporting the error and the creditor reporting the information. If one bureau has this information, it’s likely the other bureaus also have the same incorrect information. Once a dispute is received the bureau must conduct an investigation. You should submit your dispute in writing so you have a record if they do not respond or correct the error. You may need to send in copies of any documents that show that the report is in incorrect. In a perfect world the bureau recognizes the problem and fixes it quickly. Unfortunately this is not always the case and that is what the CFPB hopes to change.

CFPB’s Monitoring Plan The CFPB first will be setting up testing guidelines for the companies to follow. Starting September 30th, the CFPB will begin on-site testing, talking to relevant personnel, and requesting documents. The CFPB will then be able to assess where there are problems and how to fix them. Credit reporting is a $4 billion business, and it is imperative that the reports are correct and managed correctly for the economy to improve. The CFPB’s monitoring of credit bureaus will help guarantee that the reports are accurate and fair. Ultimately, one of the biggest goals of the CFPB is to resolve problems that have been reported by consumers. Some disputes are not resolved quickly, and it can be difficult to fix an error. The harm caused by erroneous reports can be great, and the last thing needed at that point is a lengthy dispute process to resolve the problem. The CFPB hopes to assess why some of these errors happen in order to prevent them, but also ensure that any errors are resolved quickly and easily for everyone. They plan to regulate and monitor the credit bureaus the same way they have stepped in to watch mortgage lenders, servicers and pay day lenders, to assist and help consumers.

What You Can Expect This is the first time these credit bureaus have been subject to regulations like this at the federal level. It will take some time for the CFPB to determine where there are problems and how to help fix them. The CFPB will be publishing the guidelines it plans to use for monitoring the companies before September 30, and is also publishing advisory reports about credit bureaus on its web site.

For more information on the rule CLICK HERE and HERE for a short fact sheet.

Above all else, make sure you’ve checked your free report this past year. You won’t be able to fix any problems if you don’t know they are there, and the worst time to find out about any problems is after you’ve been denied because of them.

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