A Breakdown of the CFPB's Latest Analysis on Credit Report Disputes
The CFPB's recent report on credit report disputes reveals trends in the characteristics and credit profile of people who disputed credit report information.
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Credit reports play a key role in our financial health, impacting our eligibility for credit cards and loans and the cost we pay to finance purchases, like a house or car. Credit reports can include mistakes—for example, accounts listed more than once or invalid collection accounts. Fortunately, Federal law gives us the right to dispute credit report errors when we spot them.
The Consumer Financial Protection Bureau's recently released report on credit report disputes reveals patterns in who files more disputes and the type of accounts most frequently disputed. The Bureau's report is based on an analysis of 5 million credit records, focusing on auto loans, student loans, and credit cards opened between 2012 and 2019.
Insights of Disputers
The CFPB's report reveals younger adults were a higher percentage of disputers for most types of accounts. For example, 67% of auto loan disputes were made by adults under age 44. Student loan disputes were an exception, with adults in the 30-44 age group making up a higher percentage of disputes. These adults have been in repayment status for longer and may be more likely to have errors after refinancing or consolidating their loans.
Interesting credit score dynamics emerged for people with disputes versus those who didn't. In particular, people with low credit scores represented a higher percentage of disputes across all account types, especially with auto loans (58%) and student loans (73%). The CFPB suggests this could be related to people with lower credit scores checking their credit more often, possibly after receiving an adverse action notice from a denied credit card application. The adverse action notice explains the reasons a consumer was turned down and provides free access to their credit report.
Disputes Based on Account Type and Status
People tended to dispute some types of accounts more than others. Credit cards had the highest percentage of disputes, followed by student loans, auto loans, and retail cards. Somewhat surprisingly, people with higher average credit scores made up a greater number of credit card disputes.
A consumer's payment status also seemed to play a role in credit report disputes, with a higher percentage of people disputing auto loans that were delinquent before placing a dispute.
Maintaining a Clean Credit Report
Now is a great time to take advantage of weekly free credit reports until April 2022 through AnnualCreditReport.com. Normally, you can access your free credit report once every 12 months, but the credit bureaus began offering weekly credit reports through this site in April 2020 in response to the coronavirus pandemic.
Checking your credit report regularly allows you to spot errors quickly and correct them before you need to apply for a credit card or loan.
LaToya Irby is a financial writer with over 14 years of experience. She's been quoted and published as a credit expert in several major publications including USA Today, U.S. News and World Report, TheBalance.com, and The Chicago Tribune.