| Comment Number: | 522110-00044 |
| Received: | 5/18/2006 11:27:15 PM |
| Organization: | |
| Commenter: | Akinseye |
| State: | MN |
| Subject: | Procedures to Enhance the Accuracy and Integrity of Information Furnished to Consumer Reporting Agencies |
| Title: | Advance Notice of Proposed Rulemaking |
| CFR Citation: | 16 CFR Parts 660 and 661 |
| No Attachments |
Comments:
I am writing in regard to the Interagency Advance Notice of Proposed Rulemaking: Procedures to Enhance the Accuracy and Integrity of Information Furnished to Consumer Reporting Agencies Under Section 312 of the FACT Act. The system between creditors and the Credit Reporting Agencies (CRAs) is seriously flawed. Creditors pay the CRAs to report on their behalf, while consumers cost the CRAs money due to disputes, so it seems that natural that a CRAs allegiance is with the creditors, not consumers. I will focus on errors/inaccuracies/omissions as requested in section A1. Errors: Date of Last Activity on closed, charged-off accounts is often updated when other inaccuracies in the accounts are disputed, making it appear that the accounts have been used more recently than they were. Omissions: Credit Limit is frequently NOT reported (or reported as $0) by some companies (Capital One, for example) making it appear that the consumer has no available revolving credit. Besides being false on its face, this can have a devastating impact on the consumer's credit score by causing the scoring model to interpret the consumer to have no available revolving credit, or high utilization of available credit. The reason? Some creditors believe that if another company doing a "promotional inquiry" see a "maxed out" card, the company may not extend credit. For the current creditor, they are keeping a client, often at low limits and high interest, and creating a false sense of loyalty to the company that has extended them credit. What better consumer to keep than one who accepts cards with $300 limits that have $159 "start up" fees? Unfortunately, only a small fraction of our population is even aware of which cards are best, their rights under the FCRA/FACT Act, the FDCPA and such. Few know how to file a dispute with a creditor, collection agency or credit reporting agency or what damages they've incurred as a result of inaccurate credit reporting. Imagine the real cost to a consumer who finds an erroneous negative collection account that "pops up" during the mortgage process. Quite literally, a person's FICO score could plummet 80 points due to one negative item. Translate that into real dollars. On a typical $215,000 mortgage, the monthly mortgage payment could easily be $200 more per month due to the higher interest rate charge for someone with a lower credit score. I ask, should the buyer be forced to potentially pay $72,000 over the life of a 30-year fixed rate mortgage because a collection agency placed an erroneous entry onto a consumer report, for something as simple as a $20 doctor co-pay or and overdue library book when the paid fine wasn't recorded at the time of payment? I think not! Unfortunately, even the dispute process can be difficult to navigate. When consumers file disputes, they may find that the only way to get a timely response is to send the dispute Certified Mail, Return Receipt Requested (now nearly $5 per letter). Simply sending a 39 cent letter is not enough, as the entities listed above often claim the letter was not received. In many instances, even having a solid paper trail detailing inaccurate reporting does not resolve the consumer's issues in an expeditious manner. It is not uncommon to spend upwards of $50 to try to resolve a single inaccurate negative notation that appears across reports, simply to secure a lower interest rate that would have been offered, had a negative notation not appeared. The current system is flawed, at best. If a reasonably prudent consumer is having difficulty in getting a credit report to accurately reflect their credit history, would a consumer without knowledge of their rights with respect to credit be able easily correct errors on their credit reports? I doubt it. While the laws clearly state the obligations to the consumer, in practice, few creditors, collection agencies or the CRAs take their obligations seriously, and only stronger statutes can achieve this goal