CFPB Report Finds People of Color and Young Borrowers More Likely to Have Disputes on Credit Report
The Consumer Financial Protection Bureau (CFPB) recently released Disputes on Consumer Credit Reports, part of a series of reports on consumer credit trends created using a longitudinal sample of approximately five million de-identified credit records from one of the three nationwide consumer credit reporting agencies. Among the report’s main findings was that consumers in Black and Hispanic communities, younger consumers, and consumers with low credit scores are more likely to have disputes appearing on their credit report.
“Because of the importance of credit reporting to the consumer financial system, the accuracy of credit reports is a perennial policy concern,” the report reads. “Studies have found that a substantial minority of consumers have errors on their credit reports with the three nationwide consumer reporting agencies (CRAs), including errors that can meaningfully affect consumers’ credit scores.”
The CFPB analyzed credit data from 2012 to 2019 on auto loans, student loans, general purpose credit cards, and retail card accounts. It found that families in majority Black and Hispanic census tracts were more likely to file disputes over false or inaccurate information than families in mostly white census tracts.
The report found that 4.7 percent of credit card accounts in majority Black census tracts had a dispute flag, while only 2.5 percent of majority white census tracts did. Also, 2.8 percent of auto loans in majority Black census tracts had a dispute flag, while only 0.8 percent of majority white census tracts did.
Consumers ages 30-44 were the most likely to dispute at least one account between 2012 and 2019. 41 percent of auto loan disputers were in the age group, as well as 42 percent of student loan disputers. Consumers ages 18 to 29 were also likely to dispute an account for auto loans, credit cards, and retail cards, but student loan disputers were less likely to be in that age group.
Since the onset of the COVID-19 pandemic, credit reporting complaints to the CFPB have increased year-to-year by 129 percent in 2020, and the report highlighted that the pandemic “is the most common complaint topic.”
Click here to view the full report.