We knew that credit reports were fraught with hard-to-correct errors, but the Big Three credit bureaus that maintain the reports seemed indistinguishable — until now.
Last week the Consumer Financial Protection Bureau provided the first look at how complaints against the credit bureaus stack up — and the stacks are far from even.
Each of the three companies tracks the credit history of roughly 200 million U.S. adults, but Experian got almost 60 percent more complaints than TransUnion, and 14 percent more than Equifax.
How the companies resolved the gripes varied even more widely. Complaint leader Experian rarely offered a concession or “relief” to the griping consumer, at just 1.4 percent of the time. That compares to a rate of 24 percent at TransUnion and 55 percent for Equifax.
Experian also reported that 18 percent of its responses were “in progress,” compared to 5.8 percent for Equifax and 2.9 percent for TransUnion.
Experian spokeswoman Susan Henson declined to comment, saying the company has not had time to analyze the complaint data.
Consumer advocates hope that the window into the credit bureaus’ operations will pressure them to investigate complaints and correct errors more speedily. “This is going to force the companies to be more responsive than they’ve ever been,” said Ed Mierzwinski, consumer program director at U.S. PIRG.
Because the data is new, however, it is possible that at least some of the gap relates to differences in the way the companies record complaint resolutions.
“It’s still early days,” Mierzwinski said. “I haven’t seen any data that suggests that any of the credit bureaus is more accurate than any other.” As the database grows and matures, however, it should become more useful for diagnosing problems at the individual credit reporting companies.
Experian owns the website FreeCreditReport.com, giving it a higher profile to consumers than peers and perhaps accounting for some of the complaints aimed at it, Mierzwinski noted. The website sells credit monitoring services, and its marketing tactics have been the target of Federal Trade Commission action.
The consumer protection bureau’s first batch of complaints about credit reports, which it began collecting in October 2012, detailed about 6,700 gripes when it was published last week. The data published on the website is updated daily. Lenders and other companies that furnish credit information to the bureaus were also included, but the Big Three were the subject of 97 percent of the complaints.
The number of complaints filed with the CFPB represents only a sliver of the credit files maintained by the Big Three — or the problems that consumers have with their reports. A landmark FTC study in February found that about 20 percent of Americans have an error on their credit report, and about 5 percent had errors serious enough to raise their cost of borrowing.
Complaints to the CFPB may be resolved with nonmonetary relief — such as a correction to your credit report — or monetary relief, indicating payment. When the credit bureau decides that no relief is warranted, it may close the complaint with an explanation. Differences in how the companies count their resolutions may explain some of the gap in their resolution performance.
That said, the complaint data provides a tool to work on fixing the widespread problem of credit report errors. Why should one company generate many more gripes than another? Or take longer to investigate and correct them? Answering those questions should point to solutions.
As the consumer protection bureau said in a statement announcing the publication of the data, “[t]he consequences of errors in a consumer report can be catastrophic for a consumer, shutting him or her out of credit markets.”