CFPB releases report on credit report disputes

The CFPB recently released a new report, “Consumer Credit Report Disputes.” Using data on car loans, student loans, general purpose credit cards and retail card accounts opened between 2012 and 2019, the report examines the demographics of protesters and the results of accounts with dispute flags. The report is another signal of a likely CFPB focus on potential violations of anti-discrimination laws not only by mortgage servicers, but also by servicers of all types of consumer credit accounts.

The main conclusions of the report are as follows:

  • Consumers who had one or more accounts opened between 2012 and 2019 and who had a dispute report on at least one account of a given type of credit (“disputants”) are generally younger than consumers who had an account opened between 2012 and 2019 but had none. Dispute flags (“non-disputes”). The only exception to this trend is for student loans, with student loan challengers more likely to be in the 30-44 age group than the 18-29 age group. The likely explanation offered by the CFPB is that consumers with an open student loan in their 30s are more likely to have refinanced or consolidated a loan and these loans may be more likely to have reporting issues that lead to litigation. .
  • For all four types of credit, challengers were much more likely than non-disputants to have low credit scores when opening the disputed account. The CFPB offers several possible explanations. The first is that consumers with deep subprime and subprime credit scores are more likely to experience errors. Another is that these consumers are more likely to check their credit reports more frequently than consumers with higher credit scores because they are more likely to be denied a credit application and therefore also more likely to take advantage of the right. to obtain a free credit report disclosed in an Adverse Action Notice.
  • Dispute flags were significantly more common among consumers residing in majority black census tracts than among consumers residing in majority white census tracts. The CFPB suggests that the disparity in conflict indicator rates by census tract race partly reflects trends in credit scores
  • After a dispute flag appears, results vary significantly across different credit types. For example, a substantial portion of auto loans with dispute flags are eventually closed, a large portion of student loans with disputed flags are ultimately removed, and a large portion of general purpose credit cards have the dispute flag removed with the account remaining open. Retail cards are much less likely to remain open with the dispute flag removed compared to general purpose credit cards and are instead more likely to be closed or removed

The CFPB concludes the report by commenting that an important topic for further research is whether the patterns observed in the report are driven by differences between groups and credit types in the type or frequency of underlying problems. underlyings that result in an indicator of conflict or whether they are guided by vendor practices for reporting dispute reports or responding to disputes.

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