WASHINGTON — The Consumer Financial Protection Bureau will continue its work to ensure credit reports are fair and freely given to consumers, agency director Richard Cordray said Thursday.
In a speech to the agency's Consumer Advisory Board, Cordray said more companies are offering free credit score reports to consumers since the agency started pressing the matter a year ago. However, a recent focus group study showed consumers remained confused by their multiple scores coming from multiple reports; and consumers have generally had little involvement in ensuring the reports are accurate.
"Players in a sporting contest pay very close attention to whether those keeping score are getting it right. But in the much greater game of life, individual people have had far less understanding and recognition about how the credit reporting system is treating them," Cordray said in his prepared remarks. "Despite the credit reporting industry's commercial success in selling credit monitoring services, its core credit reporting system has not yet evolved to become very responsive to the public. ... Using our supervision and enforcement authorities, we are already bringing significant new improvements to the credit reporting system — and we are only getting started."
In recent years, the CFPB has warned creditors about providing accurate information to the three main credit reporting agencies, specialty reporting companies and data furnishers, like lenders. Most recently, the CFPB said in December that it would require the largest credit reporting companies to provide regular information on the accuracy of reports being furnished and problem sectors or companies being complained about the most.
"We are seeking to ensure that the credit reporting companies are taking all reasonable measures to assure maximum possible accuracy as required by the Fair Credit Reporting Act," Cordray said. "After all, even an accuracy rate that seems high taken in the aggregate — say, 95%, for example — would mean that over ten million consumers could have problems in their credit reports that can impede their path forward in their financial lives."
Cordray acknowledged that some improvements were seen in the credit reporting industry since the CFPB started the initiative for more freely available credit reports last year.
"At that time, just a few credit card issuers — notably, Barclays, Discover and First National Bank of Omaha — had made credit scores available to consumers on their billing statements or by some other means," Cordray said. "Now, more than a dozen issuers are providing scores directly and freely to consumers on a regular basis, including a significant share of the largest issuers."
The agency estimates that more than 50 million consumers have been able to view their credit scores as part of the initiative.
"This number is poised to expand considerably this year as other credit card issuers, large and small, are now committing to making credit scores freely available to their cardholders," Cordray said.
As a comparison, the three largest credit reporting agencies maintain files on more than 200 million consumers. Another area of concern raised by the CFPB and supported by the focus group study was that some consumers do not know that there are smaller reporting agencies that specialize in helping companies when screening a job or tenant applicant.
In response to this concern, the CFPB has been posting on its website a list of nationwide and specialty credit reporting agencies that has now grown to about 50 companies, Cordray said. The list provides contact information to the companies so consumer can check their scores.
"Consumers bear their own share of responsibility to monitor and manage their credit standing, but we want to make it easier for them to do that. Efforts like the open credit score initiative are encouraging greater access to credit scores. Our list of credit reporting companies helps people understand and act on the data that is collected and reported about them," Cordray said. "As the economy continues on its current path to recovery, consumers should have the confidence that their credit reports are accurate and reliable, and that credit decisions made about them are made fairly because they are based on the right information."