CFPB Credit Reporting Complaints – Data & Report
- January 5, 2017
- Posted by: Andrew Rombach
- Category: Credit Scores
Table of Contents
In October 1970, the United States Congress passed the Fair Credit Reporting Act (FCRA). The FCRA was designed to promote the accuracy, fairness, and privacy of consumer information contained in the files of consumer reporting agencies. In short, the legislation was created to protect consumers from inaccurate information on their credit reports. After all, accurate credit reporting is important for both consumers and financial companies.
Now, credit reports are used for just about everything - from getting an apartment to getting a new credit card. Unfortunately, credit reporting is one of the most important yet misunderstood topics in personal finance. The jargon can be confusing with words like utilization and acronyms like FICO.
In 2010, the Consumer Financial Protection Bureau (CFPB) was created under the Dodd-Frank Wall Street Reform and Consumer Protection Act. Like the FCRA, the CFPB was created to help and protect your personal finances.
In July 2011, the CFPB began accepting complaints from consumers against financial institutions. Today, the CFPB has collected and displayed over 679,000 complaints made against 3,000 different companies.
Over the long holiday weekend we analyzed this massive CFPB Consumer Complaint Database. We wanted to determine which was the most popular consumer complaint in 2016. While sipping on hot cocoa, we stumbled onto something interesting.
Consumers complained about credit reporting more than anything else.
In 2016, there were 186,494 complaints filed with the CFPB. Included, we found that there were 43,206 (23.17%) complaints filed under the Credit Reporting product. Consumers complained about credit reporting more often than mortgages, debt collection, bank accounts or services, credit cards, consumer loans, money transfers, payday loans, prepaid cards, or virtual currency.
|CFPB Complaint Type||Proportion of Overall Complaints||Number of Complaints|
|Bank account or service||11.41||21,270|
|Other financial service||0.24||444|
Credit reporting breakdown by issue type
What exactly are consumers complaining about? Well the CFPB breaks down the individual complaints into five major categories.
|Credit Reporting Issue Type||Proportion of Credit Reporting Complaints||Number of Complaints|
|Incorrect information on credit report||73.95||30,903|
|Credit reporting company's investigation||12.53||5,237|
|Unable to get credit report/credit score||6.22||2,601|
|Improper use of my credit report||4.09||1,709|
|Credit monitoring or identity protection||3.21||1,342|
Sub-issue breakdown of Incorrect information on credit report
By far, the most popular complaint was Incorrect information on credit report. From here, we thought it would be interesting to breakdown these results even further.
|Incorrect Information Complaint Type||Proportion of Incorrect Information Complaints||Number of Complaints|
|Information is not mine||34.50||11,010|
|Reinserted previously deleted info||7.92||2,526|
Company level breakdown
Each CFPB complaint includes a company on record. Roughly 97% of all credit reporting complaints are made against Experian, TransUnion, and Equifax. These three companies are often known as the big three when it comes to credit reporting.
|Name of Company||Proportion of Overall Credit Reporting Complaints||Number of Credit Reporting Complaints|
Equifax received 15% and 24% more complaints than Experian and TransUnion, respectively.
Using simple statistical significance we found that the differences are actually all statistically significant. In other words, it is very unlikely that Equifax could have received such as higher number of complaints by chance. Note: Statisticians will tell you that statistical significance doesn’t mean that the finding is important or that it has any decision-making utility.
Why did we do this analysis and report?
We love looking at interesting data, trends, and themes, and the CFPB’s Complaint Database is filled tons of it.
Initially, we wanted to determine what was the most popular CFPB complaint product. From there, we thought it would be interesting to dig deeper to determine where exactly consumers are hurting. We were surprised that credit reporting was the most popular complaint type.
We are strong believers in financial literacy. We’ve found that young adults do not understand credit reporting and credit scores. And, only 17 states require personal finance education at the high school level.
Credit reporting is confusing and we believe a lack of financial literacy is leading to long term trouble for consumers. In our opinion, a lack of financial literacy is leading to many of these CFPB complaints. We hope that you found the results of this study as interesting as we do.
Over the next month we will be developing a new (free) video course for consumers. We are looking to simplify down credit reporting jargon for consumers with 10 short videos. We are planning to break down credit score ranges and inputs in simple terms. Stay tuned!
We pulled the CFPB’s Consumer Complaint Database on January 3rd, 2017. The data includes all complaints made to the CFPB from January 1st, 2016 to December 31st, 2016. In total, we analyzed 186,494 CFPB complaints.
For reference, the CFPB does not verify all the facts alleged in the complaint data. Complaint categories included Bank account/service, Credit card, Credit reporting, Debt collection, Money transfer/virtual currency, Mortgage, Payday loan, Prepaid card, Student loan, Vehicle / consumer loan, and Other financial service.