Category Archives: Consumer Financial Protection Bureau (CFPB)

Consumer Financial Protection Bureau (CFPB), Credit Report Errors, Credit Reports, Credit Scores, Debt Collection and Harassment, Identity Theft, News

How Debt Collectors Furnish Data to Credit Bureaus (Part Two)

Posted on by Credit Report Law Group

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.

Consumer Financial Protection Bureau (CFPB), Credit Report Errors, Credit Reports, Credit Scores, Debt Collection and Harassment, Identity Theft, News

How Debt Collectors Furnish Data to Credit Bureaus (Part One)

Posted on by Credit Report Law Group

According to a report by the Consumer Financial Protection Bureau (CFPB), debt collectors provide vast amounts of data to the three national credit bureaus—Experian, Equifax, and TransUnion. The bureaus then use the debt collectors’ data in calculating the credit reports (and credit scores) of 220 million consumers. And concerningly, the CFPB has identified critical issues with this data collection—points that every consumer should be aware of.

There are an estimated 7,000 debt collection agencies in the United States, with an annual industry revenue of $13.4 billion. And they’re contacting about one-third of the consumers with a credit file and at least one outstanding debt each year. But only 1,400 of these companies report the debts they hold to the credit bureaus, and there is a significant disparity in their reporting.

Ten companies are responsible for 22% of all debt-related items (known in the industry as “tradelines”) that appear on consumers’ credit reports. But it depends on the type of debt the firms pursue.

For instance, more companies report on medical debt than in other industries. The CFPB analysis found that the top ten companies that furnish medical debt only provide 18% of tradelines, so 82% come from the rest of the companies. By contrast, for debts relating to cable, cellular, and wireless bills, the top ten companies reporting on those debts make up 83% of those tradelines.

Consumers with medical debt are more likely to have multiple tradelines on their credit reports. In contrast, those with other types of debt may escape unnoticed—simply because those industry’s debt collectors are less likely to report on the debt.

This industry fragmentation means that different types of debt can result in different consumer problems. For example, medical debt is usually for smaller amounts than other categories of debt, but the vendors send medical debts to collections faster than other types of debt. Thus those with medical debts may seem like more significant credit risks because these debts are faster to show up as delinquent and have moved to collection. (These are some reasons why the credit bureaus have pledged to reduce the use of medical debt in their reports.)

In our next post, we’ll look at what happens to a negative tradeline after a consumer pays the debt collector what they owe. (Spoiler Alert: Nothing. Nothing happens.)

Click here to read part 2!

Consumer Financial Protection Bureau (CFPB), Credit Report Errors, Credit Reports, Deceptive Acts and Practices, News

Incidence and Types of Collection Tradelines on Credit Reports

Posted on by Credit Report Law Group

Many consumers don’t even know what a “collection tradeline” is, but the reality is that collection tradelines may impact your life daily. A “collection tradeline” is the term for when a creditor or collection agency report of a delinquent debt appears on your credit report. Having a collections tradeline on your report influences your credit score—which in turn impacts the amount you’ll pay for loans, your ability to get credit cards and loans, and more. In some cases, it can even affect your ability to get a job.

According to a report by the Consumer Financial Protection Bureau (CFPB), 220 million consumers have credit files maintained by the three largest credit bureaus, Experian, Equifax, and Trans Union. Of those consumers, one-third have collection tradelines included in their credit files. And the majority of them have more than one collection tradeline on their report. The median consumer has 4.5 of them in their file.

Looking at credit reports, the CFPB concluded that most collection tradelines relate to fairly small debts. The median amount owed is just $271—an amount that’s large when you can’t pay it but not so large that it should damage someone’s credit for years, which can happen.

Additionally, the CFPB revealed that medical debt is the most common type of debt included in a collections tradeline. More than half of all collection tradelines are medical debt. And those with medical debt seem to be qualitatively different than those with other types of collections tradelines. For example, the medical debtor has fewer collection items, and, on average, they owe $579. By contrast, someone with a car-related debt usually owes almost ten times as much ($5,587).

In light of the disparity in medical debt reporting, the credit bureaus recently announced that they’d be revising their inclusion of medical debt in future reports.

The lesson here is that it’s essential to monitor your credit file for anything that can harm your credit—from collections harassment to mixed files or identity theft.

If you have problems with your credit report, don’t wait. Contact an attorney who specializes in representing clients like you—a lawyer who can help you repair your record and obtain compensation for any damages you sustained.

Consumer Financial Protection Bureau (CFPB), Credit Report Errors, Credit Reports, Credit Scores

Understanding Section 611(e) of the Fair Credit Reporting Act

Posted on by Credit Report Law Group

If you’re one of the hundreds of thousands of American consumers frustrated by problems with their credit reports—maintained by one of the nation’s three largest credit bureaus, Experian, Equifax, and TransUnion—you may wonder if there’s anything you can do. But there are ways to repair your credit. Let’s briefly look at one such tool: Section 611(e) of the Fair Credit Reporting Act (FCRA).

Under FCRA’s section 611(e), the Consumer Financial Protection Bureau (CFPB) collect complaints from consumers who have issues with their credit reports. If a consumer says they’ve already tried to fix the problem on their own, that is a “covered complaint” (i.e., it is covered under the law), and CFPB must forward covered complaints to the bureaus.

Once CFPB has forwarded a complaint to a credit bureau, the credit bureau must confirm that it has fulfilled all of the statutory requirements relating to the consumer’s record. Then the bureau reports its findings back to the CFPB. Since the bureau cannot ignore the complaint and must examine the file, a report to CFPB is effectively a way to escalate a consumer’s complaint.

More than 80% of all complaints received by CFPB are covered complaints. And the FRCA also requires the CFPB to compile an annual report analyzing these complaints to see if it can identify any trends within the bureaus’ practices.

Crucially, for each covered complaint, CFPB asks the bureau to confirm whether the consumer really did previously submit a dispute directly to the bureau. And through CFPB’s recent analysis of its received complaints, CFPB did indeed make a major discovery: The bureaus confirmed that they had received consumers’ disputes—but many of the complaints had come from “credit repair agencies.” The bureaus consider these complaints unreliable, so they disregard them and don’t take any action.

That’s why you need a credit attorney to help you. With an attorney preparing your complaint, it’s more likely that the bureaus will take action to correct your file. And if they don’t, a lawyer can help you obtain compensation for any damages you sustained.

If you have problems with your credit report, contact an attorney who specializes in representing clients like you. Don’t wait. Call today.

Consumer Financial Protection Bureau (CFPB), Credit Report Errors, Credit Reports, Credit Scores, Debt Collection and Harassment, Legislation, Mixed Case File, News

Common Customer Complaints about Credit Reporting Bureaus (Part 2)

Posted on by Credit Report Law Group

In our last post (click here to read part 1), we looked at the dramatic increase in consumers’ complaints against the national credit bureaus, Experian, Equifax, and TransUnion. But, of course, we need to do more than know the number of complaints we need to pay attention to. We also want to examine the types of problems that consumers are reporting.

Consumers’ most common complaint is that there is wrong information—information about another person—on their credit reports. While this has been a frequent complaint for years, the number of such complaints has risen. Consumers complained about this more than 400,000 times in 2020.

While incorrect information on a report can be the result of a “mixed file,” when two people’s files are combined (often because they share a common name), in 2020, most people said they were victims of identity theft, and that was the reason for the incorrect information. This isn’t surprising, given the rise of identity theft-related crime. Still, it’s a particular concern because, according to the Consumer Financial Protection Bureau, victims of identity theft frequently deal with its repercussions long after the crime occurred. Ten percent still have related problems even a year after the fact.

Other common complaints include:

  • incorrect account status (e.g., debt is not shown as paid off)
  • personal information is incorrect
  • the credit bureau’s investigation did not resolve an error on a report
  • the credit bureau did not notify the consumer of the investigation’s result
  • the credit bureau investigation was not completed within 30 days

The bottom line is that if you’re having problems with your credit report and have unsuccessfully tried to resolve the situation, you’re not alone. So don’t wait. Contact an attorney who represents clients like you—a lawyer who can help you repair your record and obtain compensation for any damages you sustained.

Consumer Financial Protection Bureau (CFPB), Credit Report Errors, Credit Reports, Debt Collection and Harassment, Legislation, Mixed Case File, News

Common Customer Complaints about Credit Reporting Bureaus (Part 1)

Posted on by Credit Report Law Group

By law, the Consumer Financial Protection Bureau (CFPB) issues an annual report analyzing consumers’ complaints made to CFPB. The number of complaints has exploded in recent years, and it’s just a tiny fraction of the complaints made directly to the relevant companies. And it’s worth looking at some of the findings relating to those complaints. Once you are familiar with problems other consumers are facing, you may be able to better understand the issues that you are dealing with.

Most complaints the CFPB receives are related to the three major credit bureaus, Experian, Equifax, and TransUnion. The number of complaints against each firm has roughly tripled since 2019, and, in a year-by-year comparison, the growth of the complaints against each firm is very similar. Equifax had somewhat fewer complaints than Experian and TransUnion, but it, too, still had a tripling of complaints in the past couple of years.

More consumers now report having more problems with credit reporting than they are with debt collection. That’s a significant change. When the CFPB first began collecting complaints in 2011, debt collection was the most common cause of complaints, and, for years, there were 100,000 more complaints about debt collectors than there were about other financial service providers. Issues with debt collection still occur, but now, there are twice as many complaints against credit bureaus than debt collectors.

And there’s more for them to complain about. In 2020, consumers told the CFPB that they had multiple problems with credit bureaus. And 50% of them had filed previous complaints that were still unresolved.

Another noteworthy trend: There has also been an annual increase in complaints against “furnishers,” the companies that supply data to the credit bureaus. While still far below the number of complaints against the credit bureaus, the volume of complaints against furnishers has doubled since 2017. At this point, consumers are complaining about furnishers more than they are about their credit card providers or other bankers.

In our next post, we’ll examine the issues those consumers are complaining about. . .

Read part 2 by clicking here!

Background Check Errors, Consumer Financial Protection Bureau (CFPB), Credit Report Errors, Credit Reports, Identity Theft, News

Consumer Reporting Complaints (Part 1)

Posted on by Credit Report Law Group

The Consumer Financial Protection Bureau (CFPB) is required to gather information relating to the credit reporting industry and submit an annual report to Congress about its findings. In years past, the CFPB included this information in another larger report. But the number of complaints against Experian, TransUnion, and Equifax—the national credit reporting agencies (NCRAs)—skyrocketed in 2020. Roughly three times the number of consumers complained about each NCRA in 2020 than in 2019. Therefore, this year, the CFPB created a separate report about problems with NCRAs.

Since credit reports impact American consumers’ lives, we also take a closer look at these problems.

NCRAs collect information about consumers from “furnishers,” They then analyze this data to issue a credit report and score for each tracked consumer. NCRAs collect:

  • Personal information, such as current and former addresses
  • “Tradeline information,” information about credit accounts
  • Public record information, e.g., bankruptcy filings
  • Collections reported by debt collection agencies
  • Inquiries by companies to review consumers’ records

If a report contains another person’s information or other errors, a consumer can dispute the incorrect facts.

When filing a complaint with the CFPB, consumers provide information such as:

The bureau then forwards the complaint to the NCRA.

NCRAs must reasonably investigate a consumer’s complaint. However, NCRAs don’t have to investigate frivolous or irrelevant complaints. And they’re dismissing thousands of complaints for those very reasons.

In our next post, we’ll explain why this is occurring and what’s a solution for individual consumers.

Read part 2 by clicking here!

Background Check Errors, Consumer Financial Protection Bureau (CFPB), Credit Report Errors, Credit Reports, Credit Scores, News

Reporting of Collections Tradelines (Part 2)

Posted on by Credit Report Law Group

Read part 1 by clicking here!

While the prevalence and impact of collection debts on credit reports are clear, what’s even more of a concern is how often mistakes are made. And this flawed reporting is having an impact on consumers’ lives.

Currently, there are no accepted or enforceable standards for when or why debt is reported or when the information must be updated.

There’s no enforced requirement that reporting companies confirm the accuracy of information of a collection’s debt before making a report to the credit bureaus. (To be clear, reporting companies are supposed to give the bureaus accurate information, but they only have to correct it after the fact. After the damage has been done.)

Any Amount of Debt can be Reported, No Matter How Small

There’s no minimum required amount for collections accounts to appear on a credit report, so most amounts are for fairly small amounts—85% are for amounts less than $1,000. There is no clear requirement for when reporters update or correct their information. And multiple officials may be chasing the same debt, so one collector may receive the amount in full while others believe the debt is still owed.

Unsurprisingly, this is all leading to mistakes.

Most Common Complaints

Both the Consumer Financial Protection Bureau (CFPB) and Federal Trade Commission (FTC) have found that consumers are more likely to complain about collections reporting than any other information on their report.

When consumers complain to the CFPB about collections, 40% of the time, they’re saying that the debt collector has incorrect information or claims on their account. And consumers’ most common complaint is that a debt isn’t even theirs in the first place.

Similarly, in a review of FTC disputes relating to collections accounts, 82% said the debt did not belong to them—a rate of errors that is more than double for other types of tradeline accounts.

The good news is that consumers with wrong information on their credit reports can take action. The FTC also has found that collection tradelines are commonly changed after consumers have initiated formal disputes about their records, and consumers’ credit scores rose after that had happened.

Contact an Experienced NY Credit Repair Attorney

If you have incorrect collection information on your credit report, you have recourse. You can dispute the information. But to do so, contact an attorney who specializes in representing clients like you—a lawyer who can help you repair your record and obtain compensation for any damages you sustained.

Consumer Financial Protection Bureau (CFPB), Credit Report Errors, Credit Reports, Credit Scores, News

Reporting of Collections Tradelines (Part 1)

Posted on by Credit Report Law Group

An estimated 220 million U.S. consumers have at least one credit report maintained by the major credit bureaus of Expedia, Equifax, and TransUnion. And of these millions of consumers, one out of three have what’s known as a “collections tradeline” included in their reports. Yet most Americans may not even know what a tradeline is, let alone be aware of how collections tradelines could be impacting their lives. But impact them they do.

That’s why it’s essential to understand what a tradeline is, how they get on your credit report, and what to do if you have a tradeline on yours.

Collections Tradeline

What is a “collections tradeline”? That’s the industry’s term for debts that have gone unpaid long enough that they are in collections—the original creditor, a third-party debt collector, or a debt purchaser are seeking repayment—and this collection appears on someone’s credit report. Credit agencies consider the presence of a collection tradeline on someone’s credit report as a red flag—an indication that the person won’t pay their debts. So the agencies downgrade their credit score accordingly.

One problem with collection reports is that few companies do report, but if they do, they usually did so at the time only when they began collections proceedings. For example, a debtor may have been successfully making a car payment for years, but their creditor never reported their loan and payment history. Then, the debtor falls behind with a small portion remaining on the loan when it goes into collection. But it’s only the collections that appear on the report.

Therefore, collections tradelines can give a distorted, overly negative view of a debtor’s credit history.

An Incorrect Collections Tradeline Can Harm Your Credit Score

According to a report by the Consumer Financial Protection Bureau (CFPB), if someone with a credit score of 680 has a collections tradeline for a debt of $100 or more, their score will drop at least 40 points. Ironically enough, a collections tradeline is even worse for someone with a higher credit rating. For those with a score of 780—a very good score—their score can drop more than 100 points. And a lower credit score may mean that creditors will charge you higher interest rates on loans. With a low enough score, they may even deny you a loan.

Significantly, a debt that has gone to collections can still appear on your credit report after paying the debt in full. And even a paid collections tradeline can reduce your credit score.

And all this hinges on the credit agencies’ assuming that a collections tradeline is always correct. But that turns out not to be true. Not by a long shot. . .

Read part 2 by clicking here!

Consumer Financial Protection Bureau (CFPB), Credit Report Errors, Credit Reports, Credit Scores, Debt Collection and Harassment, Legislation, News

What Should You Do If You Have Medical Debt on Your Credit Report? (Part 2)

Posted on by Credit Report Law Group

In our last post —if you haven’t read it yet click here for part 1—, we discussed the credit bureaus’ announcement that they are changing how they will include medical debt on consumers’ credit reports. Industry watchers estimate that these changes will eliminate 70% of medical debt reports. But let’s talk about steps you can take to ensure that you’re one of those who will benefit from these changes.

First, request a free credit report and review what your record currently says. Look for any information relating to medical debt, but also keep an eye out for any other out-of-date information or inaccurate reporting (e.g., your credit report contains someone else’s information).

When you review your file, pay attention to even the smallest errors. Mistakes can have a big impact on your credit score.

For example, the Consumer Financial Protection Bureau (CFPB) has said when a credit bureau includes a collections action of more than $100 on your credit report, that can reduce a score of 680 by more than 40 points. And it has even more of an effect on people with higher scores. Those with a score of 780 can see their score drop by more than 100 points!

Additionally, don’t expect entries of debts to disappear once you’ve paid the debt off. Medical debt is frequently sold to third parties for collection, and studies have shown that many collection agencies aren’t good at updating records of other offices or credit bureaus.

If you find any entries related to medical debt, contact your medical provider, the third party you paid, and the bureau to notify them of any medical debt-related error. When submitting your complaint, ask how long it should take before your credit report is updated. Then put a note in your calendar to request a new report soon after that date—to make sure that your record has been updated.

If you have already notified a bureau of the error, but the bureau hasn’t corrected your credit report, you can contact an attorney who specializes in working to get people’s credit restored.

While there are agencies that offer services for credit restoration, recent reports show that the credit bureaus frequently disregard these complaints from these companies. But an attorney can take action to fix your credit report and help you get compensation for damages you might have sustained because your credit report was inaccurate.

If you identify any problems with your credit, including medical debt that should be removed under the new policies, contact an attorney who specializes in representing clients like you—someone who can help you repair your record and obtain the compensation you deserve.