3 Surprising Findings From the Latest Study on Credit Reporting Agencies

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Credit reporting agenciesBy Mandi Woodruff

We're still at least a year away from laying eyes on the FTC's decade-long review of credit reporting agencies, but a new study from a consumer watchdog gives an interesting preview at what we might be in for.

The Consumer Financial Protection Bureau analyzed data from the three largest CRAs –– Equifax, Experian, and TransUnion –– over the last year.

We pored over the 38-page report. Here are a few of the most staggering findings we came across:

1) Credit agencies are letting an automated system pass off 85 percent of all consumer disputes.

Why you should care: Much of the reason CRAs are under the microscope now is to figure out just how accurate they are. According to the CFPB, of the 8 million disputes filed by consumers in 2011, CRAs only fielded about 15 percent in-house. They sent the lion's share off to an automated system called eOSCAR, which in turn passed them off to whichever creditor was responsible for the data in dispute.

Here's the troubling part: For the most part, eOSCAR isn't equipped to handle supplementary materials consumers may send in to plead their case –– like letters or other documentation of their credit history. That means your creditors may never see them. Instead, eOSCAR labels disputes with one of two codes depending on their content and just 26 percent are sent to creditors with any sort of extra information.

According a rep from the Consumer Data Industry Association, timeliness is the main driving factor behind the use of the system:

"The complaint is then sent by computer to the lender who replies in kind. The lender, therefore, knows what the dispute is about (usually the amount owed on a credit card or loan) and responds appropriately," Norm Magnuson, Vice President of Public Affairs, said in an e-mail.

2) More than half of the information in the credit bureau databases are supplied by the credit card industry.

Why you should care: Since data like credit limits, payment history, and delinquent activity are essentially the biggest factors in determining your overall credit health, it's important to understand which creditors are supplying that information the most. According to the CFPB's report, 40 percent of that information is being supplied by credit card companies, and 18 percent comes from retail credit cards. In contrast, just 7 percent comes from mortgage lenders or servicers and 4 percent from auto lenders.

3) Fewer than one in five people get copies of their credit report each year.

Why you should care: This is a pretty dismal statistic. Downloading a recent credit report every year is the surest way to sound the alarm on any inaccurate information. It's also completely free to consumers (www.annualcreditreport.com). Of the 44 million consumers who could get a report, only one in five actually bother.

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fcappucino

People should be more aware and concerned what is on their individual reports because when I got mine there were things on there I had no idea were on it,plus one never knows whats in there until you apply for something where your credit life is taken into consideration.I had to request mine online and according to all three you are entitled to a free credit report annually,but make sure you can provide the necessary information asked for so you can get it,once you check the information contained in them most of it can be unsettling ,they say you can dispute those items that arent valid or are of unknown source but be prepared for a lengthy process and timely response from the entities that listed those discrepancies.It took me months of being in touch and following up on issues and currently I have still not won,its more like either you fight it and can prove its not valid,or be prepared to prove it isnt your debt. For some people there is no way around solving things unless your declare bankruptcy or make arrangements with credit counseling agencies,if you have the time and money to spend doing it.

December 19 2012 at 4:57 PM Report abuse rate up rate down Reply
cliffy934

All three credit reporting agencies must be using a different formula from each other, because each reporting agency comes up with a different credit score. If they are using the same information, then the credit scores should all be the same.

December 19 2012 at 4:34 PM Report abuse rate up rate down Reply
DickDela

There are things on my credit report that I have no idea what the are, or how they got there. How can one have them removed at once.

Dick Delahunty

December 19 2012 at 3:50 PM Report abuse rate up rate down Reply
mac2jr

We need a Civilian Rating Agency that has Government Backing to 'RATE' the Credit Rating Agencies and if the CRAs fail the public, their licenses to do business should be cancelled..

December 19 2012 at 12:05 PM Report abuse +1 rate up rate down Reply
mac2jr

Where are the reporters? Why are the news media not all over these credit agencies disclosing their questionable business practices and the ways they are destroying people's lives.. People have credit problems for various reasons, and not all reason are due to the creditor being a 'deadbeat'.. The court systems, especially the Divorce Court System pulls tons of near or absolutely illegal tricks in their attempts to 'side' with one or the other party in divorce suits, and these battles many times get reported to the Credit Rating Agencies that have not a clue as to the reasons or the legality of the claims.

December 19 2012 at 12:04 PM Report abuse rate up rate down Reply
mac2jr

Tried the three reporting companies and two of the three asked questions about where I lived over 15 years ago and about accounts, passwords, etc, from that period. Heck, I cannot remember what I ate for breakfast yesterday, and somehow I am to come up with this info, just so I can peek at my 'free' credit report? No, not happening...

As for the 'Free' credit report gotten from the third company and the a company no one except the banks and Real Estate Brokers know, there were data from others that had the same name, but different S/S numbers, and there was data from an twenty year old divorce case, etc. This is WRONG.. There does NOT seem to be any method of actually contacting a 'Live' person at these agencies, there is little to NO feedback to what they are doing when you write them, and yet the Government of the United States of America ALLOWS people to destroy lives without providing a method of disproving their claims.

December 19 2012 at 11:59 AM Report abuse rate up rate down Reply
goodgrief61945

I have numerous credit card accounts (most, opened because of a special deal or rebate), used them for years, and always paid them early. Have over fifty thousand in available credit, but have always kept my balances very low. Four mortages over the years, always paid on time. Never had a late notice in my life (67). But for some reason, my credit rating, which should be above 800, has never made it to that level. Something is wrong with the way these companies make out their reports.

December 19 2012 at 10:13 AM Report abuse +1 rate up rate down Reply
dexrmerritt

either you can afford it or you can't...well, maybe its better to owe them rather than they owe you when you depart.

December 19 2012 at 8:07 AM Report abuse rate up rate down Reply
Fran

Here's the irony, it's best if we annually get our free credit report but according to point 1 even if we had an issue there is a very good chance it won't get fixed because of the automated system.

December 18 2012 at 7:20 PM Report abuse +2 rate up rate down Reply
Ryan

I am trying to find your source material for this article and am having some trouble. Would you please cite where you retrieved this 38-page report?

December 18 2012 at 5:45 PM Report abuse rate up rate down Reply