If you’ve ever thought that the credit reporting and scoring system seems too complicated, you’re not alone. A major consumer rights advocacy non-profit has recently made the same claim and demanded reform from Congress.
The National Consumer Law Center (NCLC) issued a brief on January 18th that called for “extensive, deep-reaching reforms” to the credit reporting industry. The brief, titled “2023 Credit & Consumer Reporting Priorities to Promote Economic Stability,” is focused on problems within credit reporting agency (CRA) procedures. The report states that these problems violate the rights of consumers to accurate credit checks, background checks, and other reports used in employment, housing, and lending screenings.
While the NCLC does not directly affect federal policy, it has advocated for and protected critical consumer protection laws. Some of its greatest accomplishments include:
- The Fair Credit Reporting Act (FCRA)
- The Equal Credit Opportunity Act (ECOA)
- The Fair and Accurate Credit Transactions Act (FACTA)
- The Telephone Consumer Protection Act (TCPA)
- The Truth in Lending Act (TILA)
When the NCLC focuses on an issue, it will likely receive attention from legislators. That is excellent news for consumers who struggle with inaccurate or confusing reporting systems. Should the NCLC’s demands be recognized, CRAs could face stricter penalties and higher standards, reducing the likelihood of errors in your report.
Flaws in Current Credit Reporting Processes
The NCLC’s brief highlights many flaws in current CRA processes. It argues that CRAs do not dedicate the time and resources necessary to provide fair and accurate reports to all consumers. It provides a laundry list of reforms for Congress and the Consumer Financial Protection Bureau (CFPB) intended to prevent errors and simplify reporting.
At a basic level, the NCLC believes that CRAs use weak matching criteria that often lead to misidentification. This includes issues like only requiring the last four digits of a consumer’s Social Security number before placing information on the wrong person’s report. The brief also points out that consumers must provide excessive amounts of identification just to view their reports, much less change them. This makes it easy for mistakes to occur and hard to spot or resolve them.
Furthermore, the NCLC calls out CRAs for inconsistent investigation of disputes and delays in removing disputed, sealed, or expunged information from reports. Some consumer disputes are resolved quickly, while others of equal severity may not be seriously investigated for weeks or months. This is likely due to a related issue: CRAs do not maintain sufficient staff dedicated to resolving disputes and investigating claims by debt collectors and furnishers. This allows errors to remain on reports and damage consumers’ credit for unacceptable lengths of time.
Finally, the brief highlights the issues with automation and machine learning algorithms within CRAs. These processes have been shown to increase racial disparities because they rely on data that has not been adjusted to account for race. In addition, they are still largely untested in real-world settings, so it is unknown how artificial intelligence algorithms will impact other vulnerable populations if used to determine credit ratings.
Resolving Errors in Your Credit Report
The NCLC’s demands are an important step toward more equitable and accurate credit reporting in the U.S. However, it could be years before any flaws it highlights are addressed by the CFPB or Congress. In the meantime, the burden of resolving errors remains on the shoulders of consumers.
All CRAs must have dispute resolution systems available to consumers to help fix mistakes. However, the brief states that the “dispute system used by the Big Three credit bureaus (Equifax, Experian, and TransUnion) is entirely dysfunctional, inappropriately automated, and fundamentally biased against consumers.” Many consumers attempt to use these automated systems, only to have their dispute denied or the same error returned to their report weeks or months later.
This is why many victims of credit errors choose to get legal assistance. An experienced credit error attorney can help you:
- Collect evidence. CRAs will often deny disputes if you cannot prove that an entry is incorrect. However, proving something doesn’t exist is notoriously difficult. Your lawyer will help you gather evidence, such as documents from lenders or banks, to prove that an entry is inaccurate.
- Communicate with CRAs. Fixing an error without going through the faulty automated systems is time-consuming and difficult. Your lawyer can manage this process to ensure you don’t miss any details or have your dispute unfairly denied.
- Track down the source of errors. In some cases, errors on your report are caused by creditors reporting information incorrectly. If a mistake keeps coming back, your lawyer may be able to track down the creditor making these inaccurate reports and have them correct their records, fixing the problem for good.
- Take legal action. If communicating with creditors or CRAs is not enough to resolve your problems, it may be necessary to take legal action. Your lawyer will represent you and help you seek a court order to have your report fixed once and for all.
Expert Legal Counsel for Fixing Credit Errors
The National Consumer Law Center is standing up against unfair and mistake-prone credit reporting processes, but that will not fix problems overnight. If you are currently facing issues with your credit report, you need to take action right away to get the problem fixed. That’s where the Law Offices of Todd M. Friedman, P.C., can help. Our consumer protection and credit error attorneys have years of experience fighting on behalf of clients like you. We understand how mistakes happen and what’s necessary to get CRAs to truly fix them. We can help you get errors off your report so you can move on with your life. Learn more by scheduling your consultation with our skilled associates today.