By Hal M. Bundrick
NEW YORK (MainStreet) Of all the personal data collected on consumers, one of the most important is only available to us at a price: our credit score. The Consumer Financial Protection Bureau (CFPB) is trying to change that, calling on the nation's top credit card companies to make credit scores freely available to their customers. The right to know what data is shared with others regarding our financial reputation is one good reason accuracy is another.
"Credit reports and scores can determine the terms of people's mortgages, whether they qualify for auto loans, or if they are eligible for different credit cards," says CFPB Director Richard Cordray. "Making consumers' credit scores freely available on their monthly statement or online makes it easier for them to spot problems with their credit report."
Equifax, Experian and TransUnion, the three biggest credit reporting agencies in America, maintain files on over 200 million consumers information that is shared to lenders but available to consumers only upon request. Our credit history information can be obtained for free but a personal credit score, the rating lenders rely on to make decisions regarding credit availability and cost, is only available upon payment of a fee.
The CFPB says fewer than one in five Americans check their credit report in any given year and that means errors and omissions can linger, along with awareness of identity theft. CFPB Director Cordray has contacted the nation's top credit card companies urging them to make credit scores and related content available at no cost to their customers.
"Consumers often learn the importance of their credit standing when it is too late: after a credit application is denied or identity theft has occurred," Cordray's letter says. "Sometimes they fail to see the importance of their credit standing even if it has affected them in material ways, such as being rejected for a job or charged a higher price for a loan. Although credit scores provide just a partial picture of one's finances, this could raise awareness of credit issues and prompt busy Americans to review their credit standing."
The CFPB says the availability of credit score information may encourage more Americans to access their free annual credit report at www.annualcreditreport.com.
Between October 22, 2012 and February 1, 2014, the CFPB handled approximately 31,000 complaints from consumers regarding issues with credit reporting companies. The majority of those complaints involved the accuracy and completeness of credit reports. The top three concerns included:
- Incorrect information on a credit report: Almost three-quarters of the credit reporting complaints the Bureau received related to consumers believing that their credit reports contained incorrect information. Over one-third of these complaints were about incorrect account statuses, such as a debt being reported as delinquent when it had already been paid.
- Frustration with the credit reporting company's investigation: When consumers find incorrect information, they can file a dispute directly with the credit reporting company. About 11% of complainants were frustrated with how the company handled a dispute they filed.
- Difficulty obtaining a credit report or score: About 9% of credit reporting complaints were about consumers who said that they were unable to obtain their free annual credit report or another copy of their credit report or score.
--Written by Hal M. Bundrick for MainStreet