If you haven’t yet, read part 1!
Though tradelines—reports of outstanding debts—can considerably impact a consumer’s credit report and credit score, a report by the Consumer Financial Protection Bureau (CFPB) reveals that debt collection reporting is uneven and suspect. Updating the information on a credit report often does not depend on the debt resolution. Instead, it depends on which debt collector holds the debt.
As we detailed in our last post, debt collectors differ in who reports, but they also vary in their frequency of updating tradelines. Consumers may pay the debt in full, but it can be months or years before the debt collector reports this to the credit bureaus.
Astonishingly, CFPB concluded that debt collectors only report about 4% of the debts that are paid in full, so most debts that go to collection will remain on debtors’ credit reports indefinitely—regardless of whether or not the consumers have paid the amount in full.
Problems also arise when more than one collection agency has pursued repayment. If that’s the case, one debt collector may harass a consumer for non-payment, not believing the consumer’s assertions that they’ve already satisfied the debt, although another has received payment. They didn’t bother updating the credit bureau or the original vendor.
Having successive debt collectors pursue a debt complicates correcting a report when the original vendor or the debt collector misidentifies the debtor.
These uneven and inconsistent practices also make it more complicated to remove a mixed file from a report.
And the CFPB believes that when consumers complain about tradelines errantly on their credit report, most debt collectors fail to conduct the required investigations to clear someone’s name.
That’s why you shouldn’t rely on a debt collector to fix the error if you have problems with your credit report. Instead, you should contact an attorney whose specialty is representing clients like you—a lawyer who understands how debt collectors operate and can help you repair your record and obtain compensation for any damages you sustained.