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Credit Reporting Issues Highlighted in the FTC’s and CFPB’s Workshop

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On Tuesday, the Federal Trade Commission (FTC) and the Consumer Financial Protection Bureau (CFPB) held a workshop titled Accuracy in Consumer Reporting. The workshop consisted of four different panel discussions as well as individual remarks from several speakers. Below is a summary of the discussions relevant to the ARM industry.

Panel 1: Furnisher Practices and Compliance with Accuracy Requirements

The first panel discussed the different issues related to furnishing data to credit bureaus. The panel was moderated by two CFPB representatives: Susan Stocks (Office of Enforcement) and David Wake (Office of Supervision Policy). Panelists included:

  • Leslie Bender (Chief Strategy Officer and General Counsel, BCA Financial Services)
  • Francis Creighton (President and Chief Executive Officer, Consumer Data Industry Association)
  • Syed Ejaz (Policy Analyst, Consumer Reports)
  • Nessa Feddis (Senior Counsel and Vice President, American Bankers Association)
  • Elisabeth Johnson-Crawford (Chief Technical Officer, Credit Builders Alliance)

The panel discussed how credit reports are used: decisions regarding extending credit, rental agreements, employment, and other uses. It was noted that this list is expected to expand as time goes on. Due to this, accuracy in furnishing practices is paramount, done through policies and procedures related to accurate furnishing of data and the ability to monitor for disputes and anomalies.

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The issue of mass credit report disputes from credit repair organizations, which are both mailed directly to data furnishers and filed as complaints in the CFPB’s online portal, was brought up by Creighton. The flood of disputes and the sharp rise in Fair Credit Reporting Act (FCRA) litigation—most of which is on minuscule technicalities—harms the credit reporting process. Ejaz responded to this by saying when he worked in a Congress mailroom, they likewise received a lot of form letters and were able to sift through those to pick out the letters that pointed out legitimate concerns.

The use of alternative data in credit reporting was discussed related to both its benefits and risks. Alternative data can be a way to bring those who are currently unbanked or underbanked into the fold, especially considering the increased uses of consumer credit reports for different stages of a consumer’s life. On the other hand, alternative data needs to be closely analyzed and considered before it is included because of risks of inaccuracy and unintended consequences, such as data that allows for disparate impact for certain groups of consumers.

Panel 2: Current Accuracy Topics for Traditional Credit Reporting

The second panel focused on issues related to accuracy in credit reporting. The panel was moderated by Tony Rodriguez and Kiren Gopal, both from the CFPB’s Office of Supervision Policy. Panelists included:

  • Roberto Cera (Senior Manager, Data Acquisitions, TransUnion)
  • E. Michelle Drake (Shareholder, BergerMontague, PC)
  • Troy Kubes (Vice President and Deputy Chief Compliance Officer, Equifax)
  • Ed Mierzwinski (Senior Director, Federal Consumer Programs, U.S. Public Interest Research Group)
  • Donna Smith (Chief Data Officer, Consumer Information Services, Experian North America)
  • Michael A. Turner (President and Chief Executive Officer, Policy and Economic Research Council)

All speakers on the second panel agreed that accuracy in credit reporting is important to both consumers and industry. However, there was a contentious discussion about how serious this is for consumers, industry, and regulators. 

The biggest critics were Drake and Mierzwinski. Drake presented a need for regulators and private attorneys who work on consumer protection issues. She mentioned that currently there is a conflict of interest between industry and the credit reporting bureaus, where the data furnishers are the primary customers of the bureaus. She says, “the credit bureaus only do as little as possible to keep their business partners happy.” She further stated that consumers act as a “canary in a coal mine,” where the onus is on them to spot errors, rather than on the furnishers and credit bureaus.

This position was countered by Smith, who pointed out that the profitability of the credit bureaus’ customers is based on the accuracy of the data. It’s in everyone’s interest, says Smith, to minimize inaccuracy in credit reports. Turner concurred, stating that banks primarily deal with credit reports for the purpose of extending credit, so inaccurate data would harm the bottom line. Drake replied that if such economic incentives were sufficient, then there wouldn’t be a need for regulators and consumer advocates, which is not the case. 

Editor’s Note: Panel 3, related to background screening, is omitted from this article.

Panel 4: Navigating the Dispute Process

Credit report disputes and dispute investigation procedures are a hot button issue for the industry, so this discussion is timely. This panel was moderated by representatives from the FTC: Amanda Koulousias, (Division of Privacy and Identity Protection) and Beth Freeborn (Bureau of Economics, FTC). Panelists include:

  • LaDonna Bohling (Chief Compliance Officer, Receivable Solutions)
  • Eric J. Ellman (Senior Vice President, Public Policy and Legal Affairs, Consumer Data Industry Association)
  • Stephanie Froelich (Chief Executive Officer, True Hire)
  • Kristi C. Kelly (Attorney, Kelly & Guzzo)
  • Rebecca Kuehn (Partner, Hudson Cook) 
  • Chi Chi Wu (Staff Attorney, National Consumer Law Center)

The threshold issue brought up here is that in order to be able to dispute an incorrect item on a credit report, the consumer must first be able to access his or her credit report. Ellman mentioned that today, consumers have more access to their credit reports than they ever did before. The consumer advocates countered that the rise in credit reporting agencies—or even data gathering companies who may not consider themselves credit reporting agencies—also increases the difficulty of eliminating inaccurate information. The consumer might dispute and get deleted an inaccurate item with one credit reporting agency, only to find out that this agency got their information from a different company that continues to report the inaccurate information.

The different types of disputes were discussed. Bohling shared that while consumers have the ability to submit credit report disputes with the credit reporting bureaus, a direct dispute with the data furnisher can usually be resolved more efficiently since the data furnisher possesses a lot more information related to the situation than the bureau does. Wu, however, mentioned that there is a lot of variability in how data furnishers handle disputes. The credit reporting agency, according to Wu, is supposed to be the check that balances out this variability, and the credit reporting agency is supposed to be the check to balance out this variability. Wu cited the most recent CFPB Supervisory Highlights, which states that the credit reporting agencies are not doing that, and instead are relying solely on what the furnisher states.

The consumer advocates mentioned that the larger data furnishers require their representatives to complete a certain amount of disputes within a specific amount of time, which can lead to investigations of disputes being done in haste. Bohling, however, countered that some of the key performance indicators for these representatives are quality and accuracy.

insideARM Perspective

All in all, the workshop presented a robust discussion about credit reporting issues. Leslie Bender, who appeared on the first panel, provided the following comment to insideARM:

We are grateful that the FTC and CFPB hosted this group of stakeholders all dedicated to defending the integrity of consumers’ credit files. The workshop confirms that common ground among all the participants is that it is critical for information in consumers’ credit files to provide an accurate, complete and portable economic picture. 



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How Much Do Credit Repair Services Cost? – News Anyway

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On average, one in five Americans has an unfair credit score. Mistakes on reports from bureaus are quite common. They range from misspellings to events that never happened. A false bankruptcy may tarnish your records for up to a decade! Experts may have such errors erased, so your FICO total will rise immediately. These services are not free, but what is the best value for money?

Credit repair is a highly competitive industry. As a result, the best credit agencies on Credit Fixed     have to offer reasonable pricing. Customers are always charged depending on the length of the billing cycle (e.g., 30-45 days). In addition, there could be an upfront fee.

Cost vs. Duration

Repair is a lengthy process. Although professionals speed it up, you still need several months (between 2 and 6) to clean your records. The most complex cases linger for a year. Trusted companies allow you to stop using their services at any time. Still, the longer — the more expensive.

Today, monthly rates from the most popular providers range between $79 and $129.95. If the upfront fee applies, it may be equal to the monthly payment or different. For example, with Sky Blue Credit, you pay $79 upon enrollment and $79 monthly.

Compare Service Levels

As you can see from this Sky Blue Credit vs Lexington Law review, not every company divides its services between packages. The first provider offers a universal solution that is also modestly priced. The competitor has three tiers, from basic to advanced.

This second scheme is the most common in the industry. Consumers choose cheaper or more expensive bundles depending on their needs. The tiers often include different numbers of disputes. For example, you may be able to disprove five items per bureau per billing cycle.

In addition to analysis and disputes, premium clients may get identity theft insurance, score tracking tools, and personal budgeting solutions. The biggest firms provide their proprietary apps — for instance, the Lexington Law app is highly rated in both Google Play and App Store. On the other hand, almost every company will let you track the status of your case through their web portal.

What You Are Paying For

While add-ons vary, the core services are the same. Any company will collect your reports from three major bureaus — TransUnion, Equifax, and Experian. The staff will scrutinize the records in search of debatable inaccuracies. Next, they will collect evidence and send dispute letters to bureaus on your behalf. Eventually, the errors should be eliminated, which pushes the total up immediately.

This describes the mission of any repair firm. It will help you fix your status more quickly. After all, experts can identify the most damaging mistakes and collect sufficient evidence from the get-go. In the process, they may also send different types of correspondence to lenders and collectors. This includes:

  • debt validation letters asking the lender to prove that you owe the specified amount;
  • goodwill letters asking them to stop reporting particular items;
  • cease and desist letters to collectors, do they stop bothering you.

Repair companies may eliminate different types of mistakes. However, only some of them can delete hard inquiries. Ideally, such items are created when you apply for a loan and the lender checks your credit history. Too many hard inquiries over a short period are damaging to the total.

Money-Back Guarantee

No company can guarantee specific results. The professionals will not promise to increase the total by a certain number of points. However, you may get your money back if the firm is inefficient. Check the conditions of its money-back guarantee (if it exists).

Most commonly, clients are paid back if no entries are deleted within the first 60 or 90 days. Removal of a single item voids this guarantee. In exceptional cases, the policy is unconditional. At the moment, it is only provided by Sky Blue Credit Repair. You may stop using the services for any reason within the first 90 days and get a refund.

Choose Wisely

As there are so many companies, choosing the right provider is not easy. Consider the BBB ratings and genuine feedback from consumers on sites like TrustPilot. Check if the firm delivers on its promises. It must provide excellent support, while the absence of a money-back guarantee is a legitimate deal breaker.

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How Long Will It Take to Fix My Credit Score? – News Anyway

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Your FICO or VantageScore status depends on the contents of your credit reports. Unfortunately, data stored by TransUnion, Equifax, or Experian may be inaccurate. Correction of mistakes will make your score rise. However, this is not an overnight process.

The duration depends on the number of false entries, the bureaus involved, and the quality of the evidence submitted. Experts from top-rated credit repair companies at https://creditrepairpartner.com/ will give a tentative evaluation. If you open disputes by yourself, resolution may take longer. It may require a couple of months or half a year. Here are the basics of credit repair in the US in 2021

Why You Need a Higher Total

Many consumers suppose their credit score only affects borrowing. The lower the total — the more difficult and expensive it is to take out a loan. In reality, the consequences are more varied. Aside from banks, your credit history is accessed by landlords, insurers, and even employers. You may fail to land your dream job because your score is far from perfect.

Causes of Deterioration

This may happen fairly or unfairly. In any case, deterioration stems from negative information on your credit reports. Items like missed payments or evictions pull the score down. Some consumers have to remove bankruptcies and judgments that never happened. Even your personal details may be flawed, although correcting the wrong spelling does not affect the total.

Both systems (FICO and VantageScore) look at similar factors for the calculation. The three most influential elements for the first method are:

  • history of payments (35% of the score)
  • how much you owe in total (30%)
  • length of credit history (15%)

Your credit mix (use of different types of credit) and new accounts affect 10% each. As you can see, late or missed payments, bankruptcies, and defaults are extremely damaging. Another crucial aspect is your ‘credit utilization ratio’, which applies to revolving credit — i.e., credit cards.

The lower your balance in comparison with the total amount of credit — the better. For example, if the limit is $5,000, and you have used $2,500, the ratio is too high (50%). Experts recommend keeping it below 30% or 11%, depending on who you ask.

The Fixing Process

So, what should you do if your reports contain wrong amounts or false entries? First, you are not alone. On average, every 5th consumer in the US has mistakes on their official records. Fortunately, everyone can have errors deleted to raise the total. There are two ways to go about it. You could try doing everything by yourself or hire repair experts. Either way, here is what the process involves.

1.   Collection of Data

Every US citizen may get a free annual copy of their report from each of the three major bureaus. Due to the pandemic, the service is now accessible every week. Go to www.annualcreditreport.com to collect data from TransUnion, Equifax, and Experian at once.

Downloading it online is the fastest way, but you may also call the organization or send them a request by mail. If you hire a fixing company, they will collect this information for you. You may also get a free introductory consultation.

2.   Identification of False Derogatories

Next, you (or the expert) will need to establish inaccuracies. Note that credit reporting agencies do not share data with one another. Any or all of your reports may be flawed, which complicates the process.

As you can see from the score breakdown above, different categories of items affect the total differently. Credit repair professionals will prioritize the mistakes to fix the score faster.

  1. Collection of Evidence

When the report is inaccurate, it is your job to prove this. A repair firm will gather evidence on your behalf. This includes bank statements and other documents showing that the damaging entries are false. Professionals also send debt validation letters to your lenders. These ask them to prove that you owe the amount specified in the reports. As you can imagine, the duration of this stage varies. The more mistakes you want to be removed — the more evidence must be gathered.

4.   Formal Disputes

Armed with the evidence, you may now send formal dispute letters to the reporting agency (or agencies) involved. The bureau will investigate the claim and reply to you within 30 days. It may accept or reject the changes. Alternatively, additional proof may be required.

The Bottom Line

As you can see, fixing the score in under 30 days is next to impossible. You need to collect the reports, analyze them and gather evidence to support your claims. It is crucial to provide conclusive proof, so there is no back and forth between you and the bureaus.

The simplest cases may be resolved and just over a month. The most complex repair may last a full year. Generally, delegating this job to professionals will accelerate the result. The key is to choose a reliable firm that delivers on its promises. Check websites like BBB and TrustPilot for customer feedback, and make sure the company has a money-back guarantee for your peace of mind.

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How To Fix Credit Report Errors – Forbes Advisor

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The coronavirus pandemic has been a mental and physical drain for Americans. And during this global crisis, many consumers faced the added stress of dealing with financial services companies that didn’t always follow the rules or were slow to move when the federal government suspended certain loan payments during the pandemic.

The CFPB’s annual consumer response report reveals that credit report inaccuracies more than doubled during the pandemic, signaling dissonance between the laws that were introduced to help consumers during the pandemic, and how servicers reported suspended payments to the credit bureaus. 

And it sometimes left consumers to deal with the consequences on their own. 

Pandemic Forbearance Periods Caused Credit Report Headaches

The CARES Act, passed in March 2020, gave legal protection to consumers by providing loan forbearance periods on federal student loans and federally-backed mortgages. 

Under the act, consumers were given the option of not making payments on their loans without suffering any credit-related consequences, like late payments and delinquencies (both of which can decrease your credit scores by dozens of points). These lapsed payments were to be treated simply as payment suspensions—or, in some cases, still count as payments, such as under the PSLF program with federal student loans.

Although the federal government created these new guidelines to protect consumers from negative credit implications during the pandemic, some servicers were slow to implement new processes for how to properly report the suspended payments. Wells Fargo, for one, went as far as providing blanket forbearance; some customers saw their loans marked as negatively impacted by Covid-19 and their credit scores drop even though they didn’t request the forbearance and continued making payments.

Credit reports are the official record of your credit history and include a detailed look at loan balances, credit utilization and payment history. These reports are used by credit scoring companies and lenders to determine your credit scores, which is a number that may be used by lenders (along with your reports and other factors, like your debt-to-income ratio) to determine whether they should lend money to you, and at what cost. 

Your credit may be important for other big life decisions, too. Landlords may access a version of your credit reports when deciding whether to rent an apartment to you. Some employers may check your credit before offering you a job.

Before the pandemic, the CFPB handled approximately 350,000 consumer complaints annually. In 2020, the bureau received more than 540,000 consumer complaints. 

The CFPB report says that consumer credit reporting complaints  increased a staggering 129% from the prior two years’ monthly average, for a 2020 average of more than 23,400 per month. Complaints specifically about credit report inaccuracies increased 147% from the prior two years’ monthly average. 

The CFPB report also found that student loan borrowers and eligible mortgage borrowers both saw their credit scores drop during the pandemic, either for being automatically enrolled in forbearance without asking or for their continuing payments not being accurately counted during the forbearance period.

For consumers who opted into these forbearance programs but ended up with errors on their credit reports, inaccuracies like these could have a huge impact on their lives. In some cases, potential lenders view these marks negatively and may decline to lend to these consumers. 

Some servicers, such as student loan servicers, corrected the inaccurate reporting on their own—but consumers should still review their credit reports to be sure. 

Filing a dispute with a credit bureau can be a time-consuming task that doesn’t always guarantee having the error removed from a report. But when successful, doing so results in having the error removed, which can increase your credit scores. 

The credit reporting industry refutes the CFPB report’s findings, stating they’re the product of third-party spam in the complaint portal.

“We do not believe the complaints in the CFPB database are an accurate reflection of consumers’ experiences with credit reporting agencies,” says Francis Creighton, president and CEO of the Consumer Data Industry Association (CDIA), which represents the major credit reporting agencies, in a statement emailed to Forbes Advisor. “Over the last year, America’s credit reporting agencies have seen an increase in complaints submitted by organizations like credit repair companies. Many of these companies misrepresent their ability to help consumers through unfair, deceptive and abusive practices. They essentially spam the complaint portal, making it difficult to help consumers with legitimate problems.”

The CFPB report, however, addresses third-party abuse of the complaint portal, stating “The Bureau takes steps to identify third parties who may be misusing the Bureau’s complaint process and, when appropriate, discontinues processing future complaint submissions from those sources.”

The CDIA continues to dispute the CFPB’s report, though, saying the credit reporting bureaus have processes in place to determine whether something is a legitimate dispute, including systems to examine IP addresses, the ability to determine spoofed email addresses, measures of the volume of complaints coming from the same fax number or the use of identical form language.

How to Check Your Credit Reports

The CFPB report’s findings signal how important it is to be aware of what’s on your credit reports. Though millions took advantage of automatic payment suspensions, their credit reports could portray a much different reality—and cause serious harm to their financial wellbeing. 

Pulling your credit report used to be a once per-year, per-credit bureau privilege, as mandated by the Fair Credit Reporting Act (FCRA).  During the pandemic, however, consumers can now access their credit reports from the three main consumer credit bureaus—Equifax, Experian and TransUnion—once a week. The free weekly pulls are available now through April 2022.

Read more: Free Credit Reports Extended Until April 2022—Here’s How To Get Yours

Though it might sound like a tedious and stressful process, obtaining your credit reports can be simple—if you know the correct information. 

After heading to AnnualCreditReport.com, click “Request your credit reports.” You’ll then be directed to a new screen to fill out a form for one, two or all three of your credit reports. Each bureau requires its own request form/process.

You’ll need to provide information including your Social Security number, current address (and a previous address if you have not lived at your current address for two years or more), and then choose which report you wish to pull, if not all three. The credit bureaus will then ask questions about loans or credit accounts you may have opened to verify your identity. 

You cannot access the report you viewed after closing your browser, so make sure you save it to your desktop.

Be sure to read each page carefully. An Equifax report, for example, breaks down credit history by revolving accounts (such as credit cards), then mortgage, installment and other types of accounts. You’ll want to review each account to make sure your payments have been recorded correctly and that accounts have not been closed without your consent. 

It’s also important to take a close look at hard and soft inquiries: Soft inquiries occur when lenders review your credit report for preapproval, but they don’t affect your credit score (it’s also what a service like Credit Karma does when you check your scores and reports through its platform). Hard credit inquiries are the official check when you apply for credit, and usually drops your credit score a few points. 

If you see something unfamiliar, it could be a sign that someone has obtained your personal information and is conducting fraudulent activity by opening accounts under your name. 

No, Your Credit Scores Won’t Be on These Reports

The most important thing to keep in mind, though, is that you want your credit report to be completely accurate so your credit scores are accurate, too. A credit score is a rating of your creditworthiness, which is how lenders determine what type of loan terms you may qualify for. 

While reviewing your credit reports, you might be flipping the pages wondering, Where is my credit score?

The answer is a bit counterintuitive: Your credit scores aren’t recorded on your credit report.

Equifax, Experian and TransUnion are private companies that collect and maintain information about consumer credit. This information is then used by credit score modeling companies, such as VantageScore and FICO, to determine your credit scores. You can have multiple credit scores, and each company has their own way of calculating scores, so not all of your credit scores will be the same (although they typically use the same underlying information on your reports to calculate your scores). 

Lenders may also have their own credit scoring models.

How to Fix Errors On Your Credit Reports

Errors relating to pandemic forbearance programs include incorrect recordings of missed payments or deferments, which can be found in each account section of a credit report. Some forbearance programs started as early as March 2020 and are still applicable, including federal student loan forbearance

If you find an error on your credit report, get ready to roll up your sleeves: Errors can be tough to remove. The FCRA gives consumers the right to dispute incorrect or incomplete information on their credit reports, and requires bureaus to correct it. 

The FCRA makes credit reporting companies and information providers responsible for correcting inaccurate or incomplete information on a credit report. The Federal Trade Commission lists the steps consumers can take to correct credit report errors:

Write a dispute letter to the credit reporting company. Include the information you think is inaccurate on your credit report, such as a recording of a missed payment during the forbearance period. This information will be found on your credit report under the payments section for the specific loan or credit account. The FTC provides a sample dispute letter template here and advises consumers to include copies of any documents that support your dispute, while also explaining why you dispute the information and explicitly request that it be corrected. 

Be sure to send this letter by certified mail with a return receipt requested so you know exactly when the credit reporting company received it. All three of the major credit bureaus also have online options to file credit report disputes, and third party credit monitoring apps including Credit Karma sometimes allow you to file disputes directly through their platform.

The credit bureau must investigate the items in question, usually within 30 days, unless it considers your dispute to be “frivolous”—meaning it’s not a serious or real dispute. The credit bureau is also required to forward your information about the inaccuracy to the organization that provided it, such as a credit card company or loan servicer. If that organization finds the disputed information is in fact incorrect, it must notify all three bureaus so they can fix the information in your credit report.

Obtain results from the credit bureaus investigation. Credit bureaus are required to give you the results of their investigation in writing, as well as a free copy of your credit report(s) if your dispute results in a change.

Request notices of correction. If your dispute is successful and a change to your credit report is made, you can request the credit reporting company to send notices of any corrections to anyone who received your credit report in the past six months. You can also request a corrected copy be sent to anyone who received a copy during the past two years for employment purposes.

Request a statement of the dispute be included in your file and future report. If your dispute is unsuccessful, meaning the credit reporting company doesn’t resolve the error, then you should request a statement of dispute to be included in your file and future reports. This statement will indicate that you do not agree with the recorded information and you made an attempt to have it removed from your report. 

Write a dispute letter to the information provider. In addition to the steps listed above, be sure to inform the information provider (such as a credit card company or loan servicer) that you’re disputing incorrect information on your credit report. Use the same sample letter as the one used to inform the credit reporting companies. The process of investigation will be the same, and the information provider will have to inform the credit reporting company of your dispute if it’s found to be correct, and it will also be required to tell the credit reporting company to update or delete the inaccurate item.

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