Back in February, we discussed a report conducted by the Federal Trade Commission (FTC) that found that the three credit bureaus routinely allow material errors on credit reports to go unchanged. On July 10, The New York Times ran an op-ed by two law professors who discussed why credit report errors go unchanged. Here are five reasons.
- Mainly the problem is incentives. Consumers don’t directly pay the credit reporting bureaus to maintain their credit files, though they can pay for the files themselves. Rather, the bureaus make money from the banks, and if they demand changes to consumers’ files, the lenders might switch to a less aggressive bureau.
- Lenders also have an incentive to misreport what happens to consumers. If they report that a consumer has defaulted on a loan, then the consumer’s credit score will go down. Debtors in this circumstance are likely to pay just to keep their credit scores up. It’s not like the credit bureau would believe them if they called and said that they didn’t default on the loan.
- Although federal law obligates credit bureaus to conduct reasonable investigations of consumer complaints, they don’t really do so. They rarely communicate with the lender involved, and they often rely on the very records that caused the dispute in the first place.
- Credit bureaus also sell credit-monitoring services to consumers to help them check to make sure their credit scores are accurate. If the bureaus did a better job maintaining accurate reports, such services would be unnecessary and the bureaus would lose revenue.
- The Consumer Financial Protection Bureau has not yet dealt with credit reports, and it has its own internal problems to deal with.
The op-ed can be found here.
Finding out your credit report contains a material error, such as the woman discussed in the op-ed whose identity was confused with another due to similar Social Security numbers, is guaranteed to be a hassle to correct. If filing a complaint with the bureau doesn’t resolve the problem, you can sue the lender.
If you have excessive credit card debt, whether due to an erroneous credit report or not, talking to an experienced Las Vegas bankruptcy lawyer can help you explore your options, such as discharging it in chapter 7 bankruptcy.
For more questions about bankruptcy in Las Vegas, please feel free to contact an experienced Haines & Krieger Las Vegas bankruptcy attorney for a free initial consultation. Call us at 1-702-880-5554 to set up your free consultation.