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Politics & MoneyMortgage

CFPB: Complaints against credit reporting agencies rise sharply

Mortgage complaints fall in second monthly report

The Consumer Financial Protection Bureau released its second snapshot report of its consumer complaint database, and this time, credit reporting agencies are in the hot seat.

According to the CFPB, complaints about credit reporting agencies rose sharply from June to July. In June, there were 4,289 complaints received by the CFPB about credit reporting agencies, but in July, the CFPB received 6,969 complaints about credit reporting agencies – an increase of 56%.

In its report, the CFPB said that 77% of the credit reporting complaints submitted involve incorrect information on reports.

Consumers frequently complain of debts already paid or debts not yet due showing up on their report, negatively affecting their credit scores, the CFPB said.

Additionally, consumers complain frequently about having trouble accessing their credit reports. According to the CFPB report, consumers say that the credit reporting agencies’ “rigorous” online identity authentication questions contribute to their frustration.

And if consumers are unable to access their credit report via the Internet, they feel burdened by having to send copies of sensitive, identifying documents through the mail, which consumers feel is time-consuming and potentially unsecure.

The CFPB said that out of all the credit reporting complaints it received between March and May, 97% involved the three largest credit reporting agencies  – Equifax (EFX), Experian, and Transunion (TRU).

Overall, the top three companies that received the most complaints from March through May 2015 were Equifax, Experian, and Bank of America. Of the five most-complained-about companies, three of them — Equifax, Experian, and Transunion— are credit reporting companies.

"Whether a consumer is trying to get a mortgage, apply for a student loan, or buy a car, credit reports are fundamentally important in allowing people to access their financial goals,” said CFPB Director Richard Cordray. “As we see a rise in the number of consumers complaining about this issue, the Bureau will continue to work to ensure that credit reports are fair, accurate, and readily available to all consumers.”

Additionally, the CFPB said that the most-complained-about financial product or service in July was debt collection, which made up 31% of the total complaints submitted.

Of the 26,704 complaints handled in July, approximately 8,224 of them were about debt collection, the CFPB said.

The second most-complained-about consumer product was credit reporting, accounting for approximately 6,696 complaints.

The third most-complained-about financial product or service was mortgages, accounting for approximately 4,498 complaints.

According to the CFPB’s report, mortgage complaints actually showed the largest month-over-month decrease, falling 4% from June.

On a state-by-state basis, Hawaii, Maine, Georgia, and North Carolina experienced the greatest complaint volume increases from the same time last year; with Hawaii up 3%, Maine up 36%, and both Georgia and North Carolina up by 33%.

South Dakota, New Mexico, and Alaska experienced the greatest complaint volume decrease from the same time last year, with South Dakota down 31%, New Mexico down 16%, and Arkansas down 11%.

The CFPB report also highlighted complaints from Los Angeles, where mortgages rank as the most-complained-about product.

Mortgage-related complaints have been the most-complained-about product in Los Angeles metro area since the CFPB started taking complaints in July 2011, the CFPB said.

While the CFPB has received more mortgage complaints nationally than any other financial product, consumers in Los Angeles have submitted mortgage complaints at a higher rate—35% of total complaints—than the national average, which is 28% of total complaints.

The CFPB’s full report can be read here.

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