CFPB Issues Annual Report on Credit Reporting Agencies

The Consumer Financial Protection Bureau (CFPB) has released its annual report on the credit reporting agencies Experian, Equifax, and TransUnion. The report, required by the Fair Credit Reporting Act, highlights some improvements the credit bureaus have made but also details some ongoing challenges.

Credit Bureaus Have Improved, But Still Have Work To Do

In its annual report on the major credit reporting agencies, the CFPB noted some major improvements in compliance with federal law.

Last year, the CFPB reported that the major credit reporting agencies were failing to respond properly to consumer complaints, which totaled more than 700,000 over the period between January 2020 and September 2021.

Complaint numbers are still high, with the agency receiving 488,000 of them between October 2021 and September 2022, but the CFPB highlights some improvements to the bureaus' responses:

• Improved response quality: The reporting agencies have cut down on their use of the problematic response types the CFPB called out in last year's report and are providing more substantive responses.
• Provided more tailored responses: Most of the companies' responses now describe the outcomes of consumers’ complaints, giving a tailored response to more than 50% of complaints closed with an explanation or relief in September 2022.
• Improved rate of relief: In 2022, TransUnion reported providing relief in most complaints, and Experian reported providing relief in nearly half of complaints. Equifax reported that it did not provide relief, but its written complaint responses suggest that its rates of relief are comparable.

While improvements have been made, the credit bureaus aren't completely off the hook. The CFPB has highlighted several other areas where the companies need to improve their compliance with federal regulations and reminded them of other recent reports and guidance. Additionally, the federal agency recommends the following:

• Consider how automated processes impact customers: As the bureaus consider implementing automated processes that will affect their customers, particularly those that relate to a legal right, they should consider consumer burden, especially whether a change will require consumers to do more work to exercise their legal rights.
• Acknowledge improving technology for customer communications: Consumers no longer need to write their complaints on their own. While using technology to generate letters may make complaints sound similar, the agencies should recognize that they are, in fact, from unique individuals with independent concerns.
• Consider how to improve consumer participation: The credit reporting industry is essentially one of control and surveillance, with consumers positioned several degrees removed from their data. The CFPB suggests that this may be one potential reason there are so many inaccuracies in consumer reporting data that involves credit history on things such as credit cards and personal loans. It suggests that the bureaus enable increased consumer participation on the data side of consumer reporting to potentially create a fairer market for all those involved.

For more information on the CFPB's analysis and conclusions, read the full report.