Houston - The Consumer Financial Protection Bureau recently reported consumers in Black and Hispanic neighborhoods are twice as likely to have disputes of inaccurate information on their credit reports. These errors may be undermining their financial recovery from the pandemic.
The Federal Trade Commission says the top complaint from Black consumers is having trouble getting credit report errors corrected.
Errors on a credit can make it harder to get jobs, get auto loans and credit cards, and rent or buy homes.
"The thief got away with $8,600 worth of merchandise, furniture, electronics, and appliances. I was like, wow," said Akil Wilson.
And that's not all.
"They did manage to get away with the 2019 Range Rover Velar," he added.
Akil Wilson says identity theft has sideswiped his peace of mind and his credit score.
"There were 14 inquiries on my report, so it dropped my credit significantly, almost 200 points," he said.
Wilson has filed police reports and says he’s receiving help from the credit bureaus to refute the charges.
"We set up three-way calling, so they would know I’m on the line, Experian's on the line, and we were basically disputing these inquiries and these accounts," Wilson said.
The Consumer Financial Protection Bureau found consumers in Black and Hispanic communities are twice as likely to have disputes on their credit reports, regarding auto loans, student loans, and credit cards. The report did not pinpoint why or whether the problem is from identity theft or inaccurate reporting.
"A lot of people I talk to, they were about to get a job and their employer checked their credit, and that’s how they found out that they had a credit problem, and they didn't get the job," said Dr. Sara Greene.
Dr. Greene is a Duke University Law professor who studies credit reporting. Greene says many Black consumers with a credit report error said they didn't know how to correct it, or faced challenges getting it corrected, or getting needed documentation, such as a police report.
Greene says some even reported feeling a bias while trying to correct it.
"A lot of people did say they felt like, because of who they were, they already had low credit scores, they felt like because that's who I am, people don’t believe me," Greene explained.
Equifax, Experian, and TransUnion did not respond to our requests for comment.
But their representative, the Consumer Data Industry Association, sent us this statement:
"The Consumer Financial Protection Bureau (CFPB) recently issued a misleading report that undermines the credit reporting ecosystem’s commitment to expanding financial inclusion to American consumers, especially among communities of color and others who have traditionally been underserved.
Credit reports do not contain race, gender, marital status, or other kinds of demographic information. The Fair Credit Reporting Act (FCRA) and the Equal Credit Opportunity Act (ECOA) are federal statutes that require that lending be done fairly. Credit bureaus play an important role here. Looking back in time, creditworthiness may have been measured by the color of your skin, who your friends were, or to what house of worship you belonged. For women, creditworthiness was also measured by marital status. Our modern-day credit reporting system – facilitated by consumer credit reporting agencies – takes these biases out of lending. Lenders now use objective information to assess a borrower’s ability to repay. And if lenders end up lending in a biased way, their regulators can pursue remedies under ECOA or FCRA during the supervision and examination process. Consumers benefit from this system.
The credit reporting industry has also made significant, public commitments to furthering financial inclusion and expanding access to credit for the 63 million unbanked or underbanked adults in the U.S. By using new techniques, such as trended data or by bringing new kinds of alternative data (information not currently found in credit reports like utility payment history, rental payments, or bank transaction data) into the credit system, millions more consumers are able to access credit in a way they never have been before. With more information, lenders can better understand how consumers handle their finances, making more mainstream financial services solutions available. In addition, the credit bureaus have partnership programs that support homeownership and have invested in organizations that assist disadvantaged consumers. There are also more resources available today providing information to consumers so that they can better understand how credit works, access their credit report, and improve their economic health and wellness.
Credit reporting is good for consumers. The system improves the credit decision process, and regulators can be proud of the role they play in ensuring that discrimination in lending is pushed out of the system.
In future reports, regulators should compare their data with regions where predatory "credit repair" companies concentrate advertising to consumers promising to "fix" negative information on their credit reports. These unscrupulous companies charge consumers hundreds of dollars a year and make unrealistic promises of removing legitimate information from credit files. It’s time for the CFPB and FTC to take action against these scams."
While Wilson says credit bureaus are helping him to clear his credit, he wishes the debts had never been allowed to land there in the first place.
"I'm having to fight to have all this removed to go back to have good credit," said Wilson.
The CDIA says that all three credit bureaus are continuing to let consumers check their credit reports weekly for free through 2022, which can be done through AnnualCreditReport.com. After 2022, consumers can check their reports for free annually.
Here are tips from the Federal Trade Commission on how to dispute errors on credit reports:
- Contact both the credit reporting company and the company that provided the information.
- Explain in writing what you think is wrong, why, and include copies of documents that support your dispute.
Equifax Information Services LLC
P.O. Box 740256
Atlanta, GA 30348
Phone: (866) 349-5191
P.O. Box 4500
Allen, TX 75013
Phone: (888) 397-3742
Consumer Dispute Center
P.O. Box 2000
Chester, PA 19016
By phone: (800) 916-8800