It has never been more important to have good credit. Lenders are being pickier than ever about giving loans to borrowers, and even if you aren't in the market for a home or car loan, insurance companies and even prospective employers often use credit reports to set rates and make hiring decisions.
Unfortunately, understanding your credit report and the credit scores that various ratings agencies provide can be extraordinarily difficult. All too often, credit reports and scores are based on erroneous information, but it can be intimidating to try to go up against big credit-rating bureaus to get those errors fixed.
You're Not Alone
Now, though, you have a friend in your corner. The Consumer Financial Protection Bureau recently announced that in September, it will start supervising the credit reporting companies that collect and provide information about your credit.
One surprising thing about credit reporting companies is that there are a huge number of them. Although most people are familiar with the FICO score from Fair Isaac (FICO) as well as major credit reporting agencies Experian, Equifax (EFX), and TransUnion, the CFPB cites about 400 different agencies that collect credit information. Many of those are what the CFPB calls "specialty reporting companies" that aim at collecting information that's pertinent to specific industries, such as tenant background information for landlords.
The CFPB plans to oversee only about 30 of these agencies, but together, they bring in about 94% of the industry's total revenue. That should give you a lot of protection if you have trouble with any of the big reporting agencies.
For its part, the industry seems prepared for greater regulation. As Consumer Data Industry Association President Stuart Pratt told NBC News, "The consumer reporting industry looks forward to working with the CFPB in its regulatory oversight activities."
Nevertheless, Pratt challenges allegations that the consumer dispute process is flawed, pointing to a study that found that 95% of consumers had a satisfactory experience with their disputes.
Resources to Protect Your Credit
The CFPB's website also has some helpful information on what you need to do to protect your credit. There, you'll find easy step-by-step instructions on how to get a copy of your credit report free, as well as how to dispute and correct any errors you find on your report. Taking those steps is a smart move toward protecting your credit.
You can follow Motley Fool contributor Dan Caplinger on Twitter here. He does not own shares in any of the companies mentioned in this article.