CFPB: Credit Cards Dominate Consumer Reports
A new report from the CFPB finds that credit cards dominate consumer reports, while debt collection topped the list of disputes.
WASHINGTON, D.C. — The Consumer Financial Protection Bureau (CFPB) released today a report on the consumer experience with the nation’s three largest credit reporting companies: Equifax Information Services LLC, Experian Information Solutions Inc. and TransUnion LLC. It found that credit card history dominates information in consumer reports and that debt collection items generate the highest rate of disputes.
“Today’s study is another step toward bringing more clarity to the confusing world of credit reports. It will help educate regulators and consumers about how this important industry works,” said CFPB Director Richard Cordray. “If consumers know how these companies handle their credit histories, they can make better decisions on how to handle their financial lives.”
Equifax, Experian and TransUnion each have more than 200 million files on consumers. In a typical month, they receive updates from approximately 10,000 information “furnishers,” which are the entities that supply data on consumers. The furnishers do this on more than 1.3 billion “trade lines,” which are individual information sources on a consumer report such as a consumer’s accounts for a car loan, mortgage loan, or credit card.
The report is the result of the CFPB analyzing U.S. information from 2011, including information submitted by TransUnion, Equifax, and Experian.
The study also found that more than half of the trade lines in the credit bureau databases, which contain data from a variety of industries, are supplied by the credit card industry. Specifically, 40 percent comes from bank cards, such as general credit cards, and 18 percent comes from retail credit cards. Only 7 percent comes from mortgage lenders or servicers, and only 4 percent comes from auto lenders.
Additionally, more than a third of disputes have to do with collections, the report found. In 2011, for instance, consumers reached out to the credit reporting companies roughly eight million times, resulting in disputes of 32 to 38 million items in their credit files. Almost 40 percent of the disputes relate to debt in collections, which was five times more likely to be disputed than mortgage information. According to the industry, some of this may have to do with consumers’ incentive to dispute any negative information on their reports.
The report also found that fewer than one in five people, or 44 million consumers, obtain copies of their credit report each year. And much of the information contained in those reports comes from a few large companies. In fact, the Top 10 data furnishers provide 57 percent of the trade lines coming into the credit reporting companies.
The CFPB also reported that credit reporting companies resolve an average of 15 percent of consumer disputed items internally and without getting the data furnishers involved. The remaining 85 percent are passed on to the furnishers. Today’s report, however, found that the documentation consumers mail in to support their cases may not be getting passed on to the data furnishers for them to properly investigate and report back to the credit reporting company.
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