Credit reporting problems spark the biggest portion of CFPB consumer complaints, study says

Consumer complaints tied to credit reporting issues made to the Consumer Financial Protection Bureau (CFPB) have nearly doubled in the past year, a recent report said.

More than 800,000 complaints were made to the CFPB in 2022, up 61% from 2021, according to a report from the U.S. Public Interest Research Group (PIRG). 

The biggest share of those complaints was related to credit reporting, which jumped by 96% in 2022. Complaints against the big three credit bureaus, which include Equifax, Experian, and TransUnion, totaled 69% of all complaints in 2022. 

The top three problems that consumers had with the agencies ranged from having incorrect information on their reports, improper use of their reports, or having problems with an investigation into an issue on their credit report.

“Consumers face many financial problems, as evidenced by growing numbers of consumer complaints,” the report said. “In particular, record numbers of complaints about credit reports show that consumers are concerned that mistakes will harm their ability to obtain credit at a fair price, rent or buy a home or seek employment.”

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Bad credit reports cost consumers big money

Misreported information on consumers’ credit reports could cost them hundreds of dollars a month because it keeps them from accessing the best rates when it comes to borrowing for things like purchasing a home.

A Zillow analysis said borrowers with an “excellent” credit score — between 760 and 850 — could save up to $103,626 in mortgage interest payments over a 30-year fixed-rate loan, based on the current price of a typical home, $354,165. 

Buyers with “fair” credit scores — between 580 and 669 — may be paying up to $288 more on their monthly mortgage than those with “excellent” credit. 

Consumers that suspect possible report errors should file a complaint with the CFPB and their state attorney general, according to PIRG. They should also use the CFPB consumer complaint database when making decisions about financial choices.

If you are ready to shop for a mortgage loan or are looking to refinance an existing one, you can use the Credible marketplace to compare rates and lenders and get a mortgage preapproval letter in minutes.

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Student loan payment pause boosts consumer credit

Some consumers with outstanding student loans have seen a boost to their credit scores due to the payment pause. 

Borrowers who were delinquent or had defaulted on loan payments before the pandemic saw their scores go up by as much as 100 points, according to a recent study Center for Microeconomic Data at the Federal Reserve Bank of New York. These borrowers rehabilitated their loans during the pandemic forbearance without having to make monthly payments. 

Borrowers in default are automatically made current under the Biden administration’s “Fresh Start” initiative, according to the Department of Education. The initiative effectively gives these borrowers a second chance to build a better credit history, stop wage garnishment and regain eligibility for federal benefits like income-driven repayment and deferment plans.

As a result of the program – which marked more than $34 billion in defaulted loans as current – and the payment pause, less than 1% of total student debt was 90+ days delinquent or in default in the fourth quarter of 2022, according to data reported by the New York Federal Reserve.

While the fate of President Joe Biden’s student loan forgiveness is set to be decided by the U.S. Supreme Court by this summer, borrowers should begin bracing for loan repayments to resume. 

If the administration can follow through on its student debt forgiveness plan, payments will resume 60 days after permission is granted. If the program is not implemented, payments will resume 60 days after the June 30 deadline.

If you have private student loans, refinancing at a lower interest rate could help you reduce your monthly payments and repay your loans faster. Credible can help you find your personalized interest rate without affecting your credit score.

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