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Financial Protection Agency Calls for Free Credit Scores

Some credit card companies have begun making credit-scoring information available to consumers.

By University Alliance on August 06, 2014
More Transparency Sought in Credit Reporting

The Consumer Financial Protection Bureau (CFPB) wants the nation’s top credit card companies to give their customers greater access to credit scores and other financial information.

A February 2014 report by the federal bureau found accuracy issues top the list of consumer complaints about credit reporting. CFPB Director Richard Cordray noted that credit scores and history are used to set homebuyers’ mortgage rates, and determine whether individuals are eligible for car loans and credit cards.

Less than 20% of Americans check their credit report on an annual basis, according to the CFPB. Without such regular reviews, consumers can miss errors in the data, as well as evidence of identity theft.

“Making consumers’ credit scores freely available on their monthly statement or online makes it easier for them to spot problems with their credit report,” Cordray said in a statement.

At least three credit card companies began making credit-scoring information available to their customers in the fall of 2013, according to The New York Times. The companies are: Discover; Barclaycard, the U.S. card unit of Barclays; and First Bankcard, a division of First National Bank of Omaha.

In February, Cordray sent letters to other financial institutions urging them to provide free credit scores, along with information to help their consumers better understand their scores. “We will consider this to be a ‘best practice’ in the industry,” he wrote.

“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 noted.

According to the Consumer Financial Protection Bureau, the nation’s three largest credit agencies – Experian, Equifax and TransUnion – maintain files on more than 200 million consumers.

Additionally, the CFPB says that 11% of the approximately 290,000 consumer complaints it has received since July 2011 related to credit reporting.

Nearly three quarters of the complaints about credit reports related to incorrect information. Of those, the most common concerns or errors involved incorrect account status and information that does not belong to the consumer.

Approximately 9% of credit reporting complaints came from consumers who said they hit “dead ends” when seeking a free annual credit report or an additional copy of their report or credit score.

The CFPB routes complaints to credit card companies for a response, then forwards the company’s reply to the consumer for review. Consumers are given the option to dispute the response if they are not satisfied.

Category: 2014 Headlines