An estimated one out of every five Americans has a mistake on one of their credit reports, which have sadly become an all-too-frequent occurrence for consumers.
But the Consumer Financial Protection Bureau (CFPB) is working to change that: it’s rebuking an auto lender for reporting faulty information to the credit bureaus for years. On Wednesday, the CFPB announced a settlement with First Investors Financial Services Group Inc., which allegedly had been sending incorrect information to credit bureaus since 2011.
According to the CFPB, First Investors didn’t report all of the payments some consumers made on their loans, and sometimes distorted the number of consumers’ delinquencies. The CFPB estimates that the auto lender could have unfairly damaged the creditworthiness of tens of thousands of consumers – which could make it harder for them to get a loan, rent a house or apartment, obtain a job, or get an affordable rate on car or homeowners’ insurance.
Making matters worse, the lender catered to consumers with subprime credit – those that likely already had trouble getting loans. A credit report mistake could mean that a consumer would have to unfairly pay much more in interest to a lender.
As we pointed out in our recent policy brief, Congress should pass the Stop Errors in Credit Use and Reporting (SECURE) Act, which would improve credit reporting accuracy and provide consumers access to a free credit score – one lenders purchase – when they get their yearly credit reports at annualcreditreport.com.
The CFPB’s stepped-up enforcement is a good sign that they won’t tolerate shoddy credit reporting. We need the CFPB to continue to put the pressure on lenders that don’t follow the law. Yet some members of Congress are ramping up their attacks on the CFPB and introducing bills that would hamstring the watchdog’s effectiveness, because it hasn’t been afraid to challenge the big players in the financial services industry. You can help defend the CFPB from the big banks by sending a message to your representatives in Congress!
Has the CFPB helped you out of a sticky financial situation? Share your story!