Credit Reporting Agencies to Be Supervised by Feds

July 17, 2012 No Comments »
Credit Reporting Agencies to Be Supervised by Feds

The Consumer Financial Protection Bureau (CFPB) announced Monday that credit reporting agencies will be supervised at the federal level for the first time in history.

The CFPB estimates that there are roughly 400 consumer credit reporting agencies in existence, but most consumers only know about the big three, including Equifax, Experian, and TransUnion.

About 30 of these companies account for 94 percent of the market, and the big three extend an estimated three billion consumer credit reports annually.

The new rules will likely only apply to the biggest players, much like other oversight borne out of Dodd-Frank legislation.

Plenty At Stake

Clearly there is a lot at stake for consumers, as credit reports (and credit scores) are now used in nearly every aspect of our financial lives.

For example, when you apply for a credit card, an auto loan, a mortgage, and even car insurance, a credit report will be pulled to ensure you are a creditworthy borrower.

Assuming you are approved for said loan, the information in the credit report will also be used to set your interest rate.

The problem is that these companies, like all others, make mistakes from time to time, which could greatly impact a consumer’s financial situation.

If they’re reporting a medical collection in error, or some other discrepancy, it could mean an inadvertent denial when a borrower is most at need.

And getting one of these errors fixed in a timely and appropriate manner may not happen without proper oversight.

For these reasons, the Feds have finally decided to step in to ensure these companies are operating as they should.

The New Rules

Going forward, lenders and other companies that furnish payment information to the credit reporting agencies will need to step up their recordkeeping to ensure information is accurate.

And the credit reporting agencies will also need to ensure they are properly collecting and reporting the information they receive from creditors.

Finally, the credit report dispute system will be addressed to ensure consumers can actually fight misinformation on their credit reports, without having to jump through bureaucratic hoops.

The takeaway here, hopefully, is that the new rules and oversight will empower consumers who have been harmed by the wild, wild west of credit reporting.

For the record, you can dispute errors on your credit report in a number of different ways. You can do so with free credit score monitoring trials or via the websites of the big three credit bureaus.

So there are options currently available. But a more uniform and organized approach should make it easier and faster to get results when errors do occur.

This new oversight was a long time coming and should be a big plus for consumers.

Read more: How do I get my credit score?

Related Posts

Leave A Response