CFPB takes action against false data on credit reports

The Consumer Financial Protection Bureau (CFPB) issued guidance on Thursday to remind credit bureaus that the failure to have reasonable procedures in place to exclude obviously false data from credit reports is a violation of the Fair Credit Reporting Act (FCRA).

As Section 607(b) of the FCRA requires:

“Whenever a consumer reporting agency prepares a consumer report it shall follow reasonable procedures to assure maximum possible accuracy of the information concerning the individual about whom the report relates.”

The CFPB’s examples of “junk data” that are false on the face of it and should be screened out of credit reports include:

• An account that still shows a balance even though it is also noted as paid in full
• An account that shows a date for a debt that predates the account’s opening
• An account that shows an “Original Loan Amount” that increases over time

As we have long contended, credit reports can impact all facets of an individual’s financial life. 

The big three credit bureaus – Equifax, Experian, and TransUnion – which create and house those reports without permission act as the defacto gatekeepers to much of the financial marketplace and are failing to act in the best interest of consumers.

Far too often people are penalized for mistakes and irrelevant information on their credit reports. These credit reporting problems can keep people from getting mortgages, good interest rates, or even a job. 

According to the CFPB’s consumer complaint database, the biggest problems faced by consumers include mistakes on their credit reports and failure by the credit bureaus to fix those errors. The CFPB has found continued inclusion of information on credit reports from unreliable data furnishers and a lack of written procedures for ensuring the accuracy of consumer data.