The CFPB is urging the nation’s top credit card companies to make credit scores and related content freely available to consumers, while reminding them not to avoid investigating customer disputes, the Bureau announced Thursday.
Credit scores are used by bankers, lenders, and others to determine a consumers’ creditworthiness and the rates they will pay for services. Typically, consumers have to pay for credit scores or sign up for trial offers that may have hidden costs.
A regularly available credit score may prompt consumers to review their credit standing and pull their free annual report, CFPB director Richard Cordray says in the letter [PDF] to credit card companies.
Fewer than one in five Americans actually use the once-a-year free credit report they are entitled to from Equifax, Experian, and TransUnion, CFPB says. Without the regular review of credit reports consumers run the risk of not noticing errors in the data or identity theft. In fact, a Federal Trade Commission study last year found that 26% of consumers had errors on their credit reports.
“Consumers often learn the importance of their credit standing when it is too late: after a credit application is denied or identity theft has occurred,” Cordray says. “Sometimes they fail to see the importance of their credit standing even if it has affected them in material ways, such as being rejected for a job or charged a higher price for a loan.”
CFPB’s decision to push for free credit scores was applauded by consumer advocates, including our co-workers at Consumers Union.
“Consumers shouldn’t have to pay to find out their credit score,” Pamela Banks, senior policy counsel for Consumers Union said in a news release. “They deserve free access to the same scores lenders use to evaluate how much they pay for credit. Director Cordray and the CFPB got it right by focusing on free scores that are reliable and relevant to your finances.”
The CFPB’s call for easy credit score access comes just weeks after Discover announced it would begin providing customers’ FICO scores on monthly statements. At the time, a representative for FICO said the organization was in negotiations with other larger credit-card issuers.
Free monthly credit scores could lessen the number of credit reporting complaints the Bureau receives from consumers.
The CFPB handled roughly 31,000 complaints from consumers frustrated with credit reporting companies between Oct. 22, 2012 and Feb. 1, 2014.
The top three consumer complaints include: incorrect information on a credit report, frustration with a credit reporting company’s investigation and difficulty obtaining a credit report or score.
The CFPB has observed that data furnishers sometimes respond to a dispute by simply deleting the disputed accounts and not notifying the credit reporting company. This practice can lead to an incorrect credit report.
Cordray said the agency would continue to work to ensure that credit report disputes are fully investigated, errors fixed, and consumers treated fairly.
CFPB Calls on Top Credit Card Companies To Make Credit Scores Available to Consumers [Consumer Financial Protection Bureau]