Ever try to get a correction made to your credit report and feel like you’ve fallen down the same rabbit hole that frustrated Alice in Wonderland?
Under the federal Fair Credit Reporting Act, credit bureaus and the companies supplying credit information to them have to correct inaccurate or incomplete information in your files. You have to tell the bureaus and the creditors you have a problem with what has been reported. An investigation is supposed to straighten it all out.
The Consumer Data Industry Association, a trade organization, says the vast majority of credit reports are error free. Consumer advocates say that’s not good enough.
They are both right. In 2013, the Federal Trade Commission, after having 1,001 randomly selected consumers look at their credit files, found that 5 percent of participants had errors on one of their three major credit reports and that the mistakes could have resulted in their paying more for credit products such as auto loans.
In a follow-up study released this year that focused on a smaller group of the same participants who had at least one unresolved dispute, the FTC found that 70 percent still hadn’t been able to clear up what they believed was inaccurate information.
For many people, getting errors corrected can be maddening and they just give up. But a new agreement reached between the credit bureaus — TransUnion, Equifax and Experian — and New York Attorney General Eric Schneiderman could go a long way toward addressing people’s aggravation with the current dispute system. The bureaus are calling the enhanced help the “National Consumer Assistance Plan.”
Before I tell you about the changes in the plan, let me take you down the rabbit hole that people I’ve interviewed have experienced in trying to fix credit records.
Let’s take a case of mixed files. You notice that someone else’s bad credit account is listed on your report. That ding is messing with your good credit history. So you contact the credit bureau — and the other two bureaus, for that matter — to dispute the information. (The incorrect information might only be reported to one agency, but you have to be sure.) You provide proof — copies, never the original — that you are being confused with another consumer. You probably never speak to an actual person as you try to work it out.
The credit bureaus send an electronic inquiry to the creditor that reported the incorrect information. The creditor may just examine its files — without doing any serious digging to verify your claim — and send the same incorrect information back to the bureau. The bureau then contacts you saying the creditor “verified” that the item is correct. Because the creditor says so, in other words.
You scream. Maybe curse (after making sure no one can overhear). And you try in vain to persuade anyone with some common sense to really, truly, look at your proof.
This has happened to me on numerous occasions. In one case, the credit bureau corrected the information after I submitted the paperwork. And then several months later, because the creditor didn’t update its system, the exact information was reported again to the bureau and ended up back in my credit file, causing my score to go down. I had to repeat the process.
The plan is for the bureaus to have an improved dispute resolution process with specially trained employees to review all supporting documentation submitted by consumers for all disputes involving fraud, identity theft or mixed-up information. In cases where a creditor rejects a disputed claim through an electronic system, the bureaus won’t automatically accept the decision but will give employees the discretion to reinvestigate the dispute. That’s huge.
Also, consumers will be able to get a second free credit report in addition to the one they’re entitled to every 12 months if their dispute results in a modification. The bureaus will also create a working group that will review and help ensure consistency and uniformity in the information submitted by data furnishers.
Although the negotiations happened between the credit bureaus and Schneiderman, many of the changes will take place nationwide. But it may take a while for things to go into effect. Many of the details have yet to be worked out, said Norm Magnuson, the Consumer Data Industry Association’s vice president of public affairs. The time frame for implementation of the various initiatives reaches out anywhere from six to 36 months, he said.
When all the dispute enhancements are in place, hopefully you will no longer go mad trying to fix credit report errors.
Write to Michelle Singletary at The Washington Post, 1150 15th St. NW, Washington, D.C. 20071 or email@example.com. Comments may be used in a future column, with the writer’s name, unless otherwise requested. To read more, go to wapo.st/michelle-singletary.