Credit bureaus have 'little incentive to treat consumers fairly when their credit reports have errors,' according to Consumer Financial Protection Bureau, which analyzed 700K complaints.

Borrowers who are eager to take advantage of low mortgage rates often face “serious harms” because they can’t get errors on their credit reports fixed, according to an analysis by the federal government’s consumer watchdog.

One factor driving the lower response rate could be that credit bureaus suspect many complaints are submitted by third-party companies that promise to help consumers monitor and boost their credit scores.

But consumers can authorize companies to submit complaints on their behalf, and the Fair Credit Reporting Act requires credit bureaus to conduct a review when consumers tell the CFPB there are errors on their credit reports that they haven’t been able to get fixed.

There are many factors that plausibly could have contributed to this increase, including accommodations provided by the CARES Act, changes in regulatory guidance during the pandemic, and increased shopping for mortgage credit and mortgage refinance credit due to low interest rates.

Another reason for the increase in complaints is that consumers are increasingly submitting multiple complaints in a single online session.

For would-be homebuyers with mistakes on their credit report, the stakes are high. According to the Optimal Blue Mortgage Market Indices, a homebuyer with a 740 FICO score buying a house with a 20 percent down payment can qualify for a 30-year fixed-rate mortgage at 3.29 percent. But if a mistake on a credit report dings their score by 25 points, they’ll be demoted two credit score “buckets,” and can expect a rate closer to 3.43 percent.

Consumers who believe they have mistakes on their credit report can learn more about the complaint process on the CFPB’s consumer complaint webpage.

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