Consumers ignore free credit reportsDespite a federal law requiring the three major credit bureaus to provide consumers a free credit report each year, most fail to take the government up on the offer. The CFPB found only 44 million people -- about 20 percent of consumers -- requested their file in 2011. Those that did look at their credit report filed disputes for 32-38 million items on their files. In about 40 percent of those disputes, debts in collection were at issue. Unfortunately for consumers, who may think their dispute will get a third-party review, the vast majority of complaints simply get forwarded to the company that furnished the data on the report. Only 15 percent of disputes are resolved internally by credit bureaus. The rest are sent for review by the company supplying the account information to the bureau.
Credit cards a major influencerFor anyone trying to build up their credit, it might be worthwhile to know that credit card companies furnish more than half of the payment data being sent to credit bureaus. According to the CFPB study, information received by the bureaus can be broken down to the following major sources:
- Bank cards, such as general credit cards issued by Visa and MasterCard: 40 percent
- Retail credit cards: 18 percent
- Mortgage lenders or servicers: 7 percent
- Auto lenders: 4 percent
With credit bureaus playing such an integral role in personal finances today, consumers shouldn't take for granted that their account data is being reported properly. Requesting a free annual report from annualcreditreport.com (the only U.S. government-sanctioned source for free reports) and reviewing it thoroughly can be a great first step toward monitoring your credit.If you are trying to build your credit, make sure all your accounts are reporting payments to the bureaus. If not, contact the companies that aren't and ask if they will start providing payment information. This may help boost those three magic numbers that mean so much today.