The federal watchdog agency tasked with ensuring consumers have more protections that relate to their finances recently released a study on the ways in which the credit reporting industry typically works, and its findings prompted a hearing on Capitol Hill.
Earlier this month, the U.S. Senate Committee on Banking, Housing and Urban Affairs’ Subcommittee on Financial Institutions and Consumer Protection convened a hearing entitled “Making Sense of Consumer Credit Reports” in reaction to the Consumer Financial Protection’s study. Witnesses included Corey Stone, the assistant director of the CFPB’s Office of Deposits, Cash, Collections and Reporting Markets; Stuart Pratt, president and chief executive officer of the Consumer Data Industry Association; and Chi Chi Wu, an attorney at the National Consumer Law Center.
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Both Wu and Stone highlighted the various ways in which there may be problems in the credit reporting industry that can end up adversely affecting consumers. In separate testimony, they mentioned numerous statistics that show just how difficult it may be for consumers to even know when there’s an error listed on their credit report through no fault of their own, and the difficulties they may have in getting these issues cleared up in an expedient manner.
For instance, just 20 percent of people actually take the time to order a copy of their credit report every year, and about a third of all items that those who do check these documents end up disputing relates to balances already sent to collections agencies, Stone said in his testimony. Wu also noted that whether 30 percent or 1 percent of credit reportscontain erroneous information, that is likely too much, and can cause significant problems for those affected by the entries.
For his part, though, Pratt noted that the credit reporting industry has repeatedly worked with the CFPB in a number of ways to increase the clarity consumers find in dealing with their credit reports, and said that to mischaracterize its efforts to make the landscape safer for borrowers is essentially tantamount to chasing headlines.
The CFPB has had full regulatory control over banks and non-bank financial institutions for some time now, and is attempting to roll out more consumer protections for all kinds of products people use in their everyday lives.
Image: rpongsaj, via Flickr
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