money Americans lodged record number of financial complaints last year
Complaints about financial services companies hit an all-time high last year as Americans wrestled with the economic fallout from the pandemic, according to a new report. Credit reporting bureaus bore the brunt of the criticism.
Consumers lodged 444,551 complaints about banks, credit bureaus, and debt collectors in 2020, over 50% more than the previous annual record of 277,366 set in 2019, according to the report by the U.S. Public Interest Research Group Education Fund (PIRG), a nonprofit consumer advocacy group, which analyzed complaint data from the Consumer Financial Protection Bureau (CFPB).
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Chief among the issues were inaccuracies on credit reports, accounting for 282,000 — or 63% — of total complaints. That was more than double 136,000 complaints about credit reports in 2019. The Consumer Data Industry Association, the trade group that represents the credit bureaus, did not return Yahoo Money's requests for comment on the report.
“The pandemic has caused people to be worried about their credit score going down,” Ed Mierzwinski, senior director of the U.S. PIRG’s Federal Consumer Program and report author, told Yahoo Money. “They're filing more complaints, plus they're being harassed by debt collectors more than ever.”
'Credit report is the key to your financial and your economic future'
One reason for the uptick in credit report complaints? Inaccurately reported mortgage forbearance accounts by lenders, said Mierzwinski. Under the CARES Act, mortgage borrowers can ask for an initial forbearance period of up to 180 days when mortgage payments are suspended, along with additional extensions if needed.
“The credit bureaus insisted on a convoluted pandemic-related coding system for banks and other furnishers to follow in the CARES Act of 2020,” he said. “We and other advocates had instead pushed for language passed by the House, but made into law, to simply ban negative credit reporting during the pandemic.”
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A credit report error could be costly, especially for low-income earners who have faced the pandemic’s brunt with layoffs, furloughs, reduced hours, or wages. A mistake could mean the difference between employment and unemployment or homeownership and renting, Mierzwinski said.
“The credit bureaus are the gatekeepers to whether you get a job, or whether you get credit, and how much you pay for that credit,” he said. “Your credit report is the key to your financial and your economic future.”
'When you complain to the CFPB, you'll get results'
Borrowers of federal student loans and mortgages have had the opportunity to place their loans into forbearance since the pandemic’s onset. But Mierzwinski expects that some will turn to loans — which require a favorable credit score — when their forbearances plans expire and they owe back payments.
“They're very scared of what's going to happen when they have to pay a lot of money, but they're anticipating they're going to need a better credit report and they look at their credit report, and they find it's written with mistakes,” he said. “And so they're trying to fix it.”
Read more: Why you don’t want bad credit
If you find an error on your credit report, Mierzwinski recommends sending complaints to both the credit bureau and the bank or company that holds your loan or credit card and provides the data to the bureaus. Beyond that, he suggests filing complaints to the CFPB.
“The very act of complaining triggers a process where the CFPB contacts anybody you complain about and essentially forces those companies to take notice of your complaint,” he said. “A lot of the time when you complain to the CFPB, you'll get results.”
Stephanie is a reporter for Yahoo Money and Cashay, a new personal finance website. Follow her on Twitter @SJAsymkos.
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