Add this to the financial consequences of the epidemic. More and more consumers are complaining about the mistakes in their credit reports, and many are frustrated when they try to correct mistakes, according to federal grievances.
In 2020, consumers filed more than 280,000 complaints about credit reporting issues. More than half of the complaints received by the Consumer Financial Protection Bureau last year, said Sayed Eyaz, a political analyst at Consumer Reports.
According to the agency’s online grievance database, the number of credit report grievances has doubled since 2019.
“They certainly had a balloon for a year,” Eyaz said.
Mistakes in credit reporting have long been a problem for American consumers. Acc accuracy is important as the content of your credit report helps you determine if you can qualify for credit, credit cards և what interest rate you will pay.
Common mistakes include loans that have been repaid but appear to be unpaid. debts are wrongly reported, they are in collection. incorrect personal information և addresses; առը “Mixed” files in which other person information appears in your credit report.
But mistakes are even more troubling during an epidemic, when many families struggle and may not have time to make corrections, says Chi Chi Woo, a lawyer with the National Center for Consumer Rights.
Some mistakes are related to the epidemic. The Federal Government Assistance Program allowed for a pause to repay certain loans, including federally secured mortgages and federal student loans. Borrowers’ credit reports assume that the loans are current, although the payments are interrupted to avoid damaging their credit while they are in financial distress.
According to complaints from the Consumer Bureau, this did not always work out as planned.
Normally, the credit bureau has to respond to complaints within 30-45 days, but at the beginning of the epidemic, the government gave them more flexibility during that time. “Disputes went unanswered or took too long,” Wu said.
The credit report is a summary of your debt և payment history, which lenders report to three major credit bureaus: Equifax, Experian և TransUnion. Bureaus use a formula created by another company, usually FICO or VantageScore, to deliver information to a triple credit score. A score above 700 is usually considered “good”.
Lenders use the account as a picture of whether it is possible to repay the loan. Accounts can also be checked when you apply for a job or rent. The higher the score, the better. Paying B Bills պահ Keeping credit card balances low helps boost points.
Due to the complexity of the credit reporting system, customers can complain when they find a mistake, try to correct it.
In California, for example, a student borrower complained in December of a 200-point credit decline due to “incorrect” information provided by a student loan officer. The customer said that it did not provide incomplete information, and referred the borrower to the credit bureaus. The credit crunch has prevented the borrower from taking steps such as moving and buying a car, but “no one seems to be helping to fix it,” the borrower wrote. “My credit score continues to fall after I tried hard to rebuild it.”
A similar case is the subject of a lawsuit cited by Consumer Reports, which last summer a New Jersey woman filed in U.S. District Court against Equifax, TransUnion core VantageScore. The complaint alleges that his student loan servicer, Navient, erroneously stated that his payments were too late, even though the federal assistance program was supposed to show them. The mistake led to the fact that his credit score fell by almost 100 points, the complaint says.
Oil, which is not the defendant in the lawsuit, corrected the mistake, but the credit bureaus did not update its credit score to reflect the change, the lawsuit said.
The complaint claims that “thousands” of borrowers are in such a situation, although the borrower’s lawyer Philip L. Frietta of Bursor & Fisher in New York said the number was an estimate.
Navient spokesman Paul Hartwick declined to comment.
“During the epidemic, Navient announced student loan repayment status, as instructed by the Federal Department of Education,” he said. “If you have questions about a particular loan rating, please contact the issuing company,” Navient advised borrowers.
TransUnion declined to comment. Equifax և VantageScore did not respond to email. Mail և Phone inquiries.
Student loan providers say borrowers are sometimes confused as to whether they are eligible for the mitigation of federal payment offered during the epidemic. Some borrowers may have missed payments before protection, such as stopping payments, resulting in lower scores. others may have private student loans that are not eligible for assistance.
Credits are usually renewed automatically as soon as the credit report is updated, said Francis Crichton, President-CEO of the Consumer Data Industry Association, which represents credit bureaus and other data companies. The speed with which a report is updated depends on how often the customer provides information to the credit bureau.
Creighton also said that many factors affect the consumer’s credit rating, so it is difficult to attribute the change in unit credit to a single item in the credit report.
He said most of the complaints were related to false complaints filed by unscrupulous “repair” credit companies on behalf of their clients. “These companies charge fees, promising consumers that they will improve their bad credit by removing negative but accurate items from their credit report, such as late payments and bankruptcies,” he said.
If the sharp rise in federal grievances reflected a real increase in reporting errors, Criton says, banks and lenders would have noticed. “It is not real,” he said. “We do not see a lot of new, practical disputes.”
The Consumer Financial Protection Bureau has taken legal action against some credit repair firms and advised consumers to be wary of companies that charge fees to clear negative but current credit report data. “No one can do that,” the bureau said in a 2019 consultation.
Responding to Creighton’s comments on the false complaints, the bureau said companies could file suspicious complaints for further review in an “administrative response” that the complaints would not be published in the database. According to the Bureau, in 2020, companies used the administrative response option for 3% of the loan or complaints sent by the consumer for their responses.
There are signs that consumer credit has generally fared well during the epidemic. The FICO average rose to 711 in October from 708 in the spring as borrowers reimbursed spending, used government incentive checks to pay their bills, and used lender assistance.
“The comfortable conditions for the borrowers were really useful for the borrowers,” Jawski said.
Here are some questions and answers about credit reports.
H. How long can loan payments be suspended during an epidemic?
Answer. The Biden administration has extended the suspension of federal student loans until September 30. Borrowers on federal student loans will continue to defer payments without penalty, and their interest rate will be 0%. (Private student loan borrowers do not have the right to be automatically suspended).
The administration has given homeowners until June 30 to sign up for a program that will look for a break in federally secured mortgage payments.
Generally, if you stop making payments when they are stopped, the loans should be presented to the credit bureaus as current.
Any suspension or delay of credit card payments is at the discretion of the issuing bank, so consumers should contact the issuer directly to discuss options.
H. How can I check my credit report?
Answer. You can usually check your annual reports once a year at Annualcreditreport.com, but large credit bureaus allow consumers to check them for free weekly until April. It is unclear whether weekly access will be extended, so it is best to use the extra availability while you can. You should check your identity, usually by answering questions you are likely to know, such as the amount of your mortgage or the address you lived at 10 years ago. This helps keep your financial records comfortable when making inquiries.
H. What is the best way to dispute my credit report error?
Answer. You can file a complaint online, but Ejaz of Consumer Reports recommends filing your claim in writing to avoid wrongdoing. Sample letters are available on the Consumer Bureau website. Save copies եք Send your email by certified mail. It helps to include copies of your grievance documents, such as payment records. It is best to challenge the error with all three bureaus.