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CFPB Takes On How 'Eye-Opening' Rate of Credit Errors Is Handled

NEW YORK ( TheStreet) -- The odds of experiencing an error on your credit report are higher than you might think -- so much so, that Uncle Sam has apparently had enough.

A February study from the Federal Trade Commission says that 20% of Americans have errors on at least one of their three credit reports (from Experian, Transunion and Equifax (EFX)) and that 5% had mistakes that "could led to them paying more for products such as auto loans and insurance."

"These are eye-opening numbers for American consumers," said Howard Shelanski, director of the FTC's Bureau of Economics. "The results of this study make it clear that consumers should check their credit reports regularly. If they don't, they are potentially putting their pocketbooks at risk."

But it's not just the consumer's responsibility. Companies that supply consumer financial data to credit reporting companies have skin in the game, and last week the U.S. Consumer Financial Protection Bureau put a spotlight on credit reporting practices to start holding them accountable for their accuracy and thoroughness.

Companies that provide consumer financial data to credit reporting agencies are called "furnishers." One of their chief responsibilities is to investigate consumer complaints on credit reports, using data submitted by consumers and provided by credit reporting agencies.

The CFPB, however, is not entirely happy with the way furnishers and credit agencies interact on consumer complaints. One primary complaint: There is no official mechanism for credit reporting agencies to send data provided to them by customers to furnishers during a dispute.

"Credit reports play a critical role in the lives of consumers," CFPB Director Richard Cordray says. "Given the importance of these reports, consumers need to know that their documents are being reviewed when they dispute what they believe is a mistake on a report."
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