Why Disputing an Error in Your Credit Report Has Been a Frustrating Experience

If you’ve ever tried to fix a mistake on a credit report, until very recently, any proof you submitted to back up your complaint might have been ignored.

The Consumer Financial Protection Bureau, which regulates the credit reporting agencies that issue credit reports, has shed some light on how those complaints have been handled and has warned that things had better improve.

The CRAs handle only about 15 percent of consumer disputes themselves, the CFPB says, and use an electronic system called e-OSCAR to pass on the rest to “furnishers” — the companies that provide credit information to the CRAs and are supposed to investigate consumers’ complaints, including any information provided by the consumer.

But the CRAs weren’t passing on that information, because the system they built didn’t allow it.

“In a December 2012 report, the CFPB highlighted the fact that the ‘e-OSCAR’ system did not provide a means for credit reporting companies to forward to furnishers any documents submitted by consumers,” the Consumer Financial Protection Bureau says.

“Four companies built and still own e-OSCAR – Equifax, Experian, Innovis, and TransUnion. The current Internet-based system was created in 2001,” that December report says.

Since then, the CFPB has been helping the credit bureaus improve e-OSCAR, and it can now pass on the evidence. “Equifax, Experian and TransUnion last month started to pass along documents submitted by consumers, such as proof of repaid debt, to the bank or debt collector with responsibility for investigating the dispute,” The Wall Street Journal says. The CFPB assumed oversight of CRAs last year.

But a new agency bulletin suggests there are still problems with the way complaints are being handled. It specifically calls for furnishers to investigate consumer concerns and report investigation results back to the credit reporting agencies. It threatens legal action against those who don’t.

Credit report errors can have serious consequences. “Most decisions to grant credit – including mortgage loans, auto loans, credit cards, and private student loans – include information contained in credit reports as part of the lending decision,” the CFPB says. “These reports are also used in other spheres of decision-making, including eligibility for rental housing, setting premiums for auto and homeowners insurance in some states, or determining whether to hire an applicant for a job.”

Of course, CRAs aren’t best known for promptly fixing mistakes. A jury awarded one woman $18.6 million from Equifax because the credit reporting agency failed — for two years — to correct inaccuracies she said were on her report, including basic stuff like an incorrect Social Security number.