The Consumer Financial Protection Bureau (CFPB) fined Equifax $15 million for credit report errors . This happened because Equifax made mistakes with people’s credit reports. According to the CFPB’s recent announcement, the company did not properly look into complaints from customers.
Equifax is one of the three main credit reporting agencies in the U.S. that handle credit reports. The other two are Experian and TransUnion.
According to the CFPB’s order, Equifax did several things wrong. It ignored documents and the evidence consumers sent when they reported problems. The credit reporting agency also let mistakes that had already been fixed show up again. This sent confusing and contradictory letters to customers about the results of investigations. It also used flawed software code, which caused incorrect credit scores.
CFPB Criticized Equifax for Having a Flawed Process
The CFPB recently criticized Equifax for using a flawed system to handle complaints. Equifax processes around 765,000 consumer complaints every month. The CFPB accused the major credit bureau of violating the Fair Credit Reporting Act, which protects consumers’ rights. According to the CFPB, these problems with Equifax’s dispute policies and technology have been happening since at least October 2017 and have been causing harm to millions of people.
In order to move past the investigation, Equifax agreed to settle these accusations. The company said it has spent over $1.5 billion in recent years to upgrade its technology and make improvements. These improvements include changes to how it handles complaints and supports consumers. A spokesperson for Equifax said their goal is to help people make the best financial choices. They also admitted that even one mistake affecting a customer is one error too many.
As part of the settlement, Equifax has to pay a $15 million fine. This comes after a separate lawsuit the CFPB filed against another credit bureau earlier this year. The CFPB filed this lawsuit against Experian, accusing it of not properly investigating credit report errors. However, in a statement on their site, Experian denied the claims and called the lawsuit unfair and without merit.
Credit bureaus have been sued several times for this conduct. According to Chi Chi Wu, a lawyer at the National Consumer Law Center, these kinds of problems have been happening for decades. Equifax has also dealt with other issues, such as a 2017 data breach that exposed the personal information of 147 million people. The company later agreed to pay $700 million to settle that case.
The Importance of Credit Reports
A credit report is a ledger that shows how consumers have handled borrowed money. It shows things like a consumer’s loan payment history or whether they have ever declared bankruptcy.
If there is wrong information on your credit report, it can cause big problems. Adam Rust, director of financial services at the Consumer Federation of America, a consumer advocacy group, explained these types of errors.
Rust said that mistakes on your credit report can make it harder to do important things. For example, it could stop you from getting a loan or finding a job. It can even make it hard for you to rent an apartment. These are all things that are important in everyday life.
In Rust’s words, “It can change your ability to do all kinds of things that are very fundamental to navigating your personal life.”
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How to Keep a Good Credit Report
Experts recommend that you check your credit report at least once a year. The Federal Trade Commission (FTC) also suggests that you should check your credit report before you apply for things like a credit card, loan, insurance, or even a job.
When you check your credit report, make sure all the personal details, like your address and Social Security number, are correct. You should also double-check and ensure all the information about your accounts is correct.
This habit of checking your credit report is an important part of staying on top of your finances. It is like the financial version of staying healthy hygienically.
It is also important to know that your credit report is different from your credit score. A credit score is a number based on the information in your credit report. If your credit score suddenly changes, it could be a sign that something is wrong, and it might need your immediate attention.
The three main credit bureaus in the U.S. allow consumers to get a free copy of their credit report once a week. However, as a consumer, you need to be careful of other websites that might charge you or try to scam you, the FTC warns.
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How to Handle Mistakes on Your Credit Report
If you notice a mistake on your credit report, the first thing you should do is dispute it. You can do this by writing a letter to the credit bureau. Include any documents that prove that there is an error, then send everything through postal mail. It is also a good idea to request the return receipt so that you can confirm if they got your letter.
According to Wu, fixing these mistakes by mail is often more successful than trying to do it online. Another thing you can do is to file complaints with the CFPB and your state’s attorney general’s office. Doing this will help to make sure the issue gets more attention.
If the credit bureau does not fix the mistake, you can ask them to include a note in your credit file. This note will explain your side of the dispute, and it will show up in future credit reports. You can also ask the bureau to send your note to anyone who received a copy of your credit report at that time.
If you have tried everything and still cannot fix the problem, it might be time to talk to a lawyer. Wu explains that not every mistake is serious enough for a lawsuit. However, if the error makes your loan more expensive, it is a good reason to consider legal action.