This Day On The Street
Continue to site right-arrow
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
TheStreet Open House

Credit Cards And Collections Agencies Weigh Heavily On Credit Reports, Says CFPB





The handful of credit cards in a typical American's wallet bears a disproportionate impact on a credit report compared to other consumer accounts, according to a new CFPB report. In a white paper published this month, officials at the Consumer Financial Protection Bureau used existing research to call out the need for stronger financial literacy among consumers and broader protection from lender errors.

Based on publicly available information from industry, government, and academic sources, the study's authors found that 58 percent of reported trade lines originated with personal credit cards. By comparison, only 7 percent of trade lines represented mortgages, while just 4 percent of trade lines originated as auto loans. According to Federal Reserve statistics, Americans actually carry an almost inverse ratio of revolving to non-revolving debt.

The study's authors estimated that credit bureaus pass as much as 85 percent of their complaint case load to data furnishers, such as credit card issuers and collections agencies. Although the agencies assert their neutrality over the information that appears on consumer credit reports, CFPB officials have stated that credit bureaus' automated complaint systems may not pass along enough data for banks to thoroughly resolve legitimate mistakes.

Debt buyers and third-party collection agencies generated nearly five times as many complaints as other types of data furnishers, according to the study's authors. Although more than a third of reported complaints involve collections agencies, fewer than one in five Americans took the time to review their free annual credit report last year. CFPB officials speculated consumers often wait to review their credit until they start shopping for mortgages, auto loans, or balance transfer offers.

In a statement to reporters, CFPB Director Richard Cordray said that the study would "help educate regulators and consumers" about how the credit reporting industry works. Last July, Cordray's bureau became the first government agency to directly supervise activities at the country's largest consumer credit reporting agencies. Consumers can now file official complaints about credit reports on the bureau's website, at CFPB.gov.

null

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Try it NOW
Only $9.95
Try it NOW
14-Days Free
Try it NOW

Check Out Our Best Services for Investors

Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Options Profits

Our options trading pros provide over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • Actionable options commentary and news
  • Real-time trading community
Try it NOW
Try it NOW
Try it NOW
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
SYM TRADE IT LAST %CHG

Markets

DOW 17,712.66 +34.43 0.19%
S&P 500 2,061.02 +4.87 0.24%
NASDAQ 4,891.2190 +27.8570 0.57%

Partners Compare Online Brokers

Free Reports

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs