Blog

Is your credit report wrong? How to find out and fix it

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The Federal Trade Commission this week released its latest findings in a ten-year study on the accuracy of credit reports. This report is another reminder of how important it is to review your credit report for inaccuracies.

What does this mean to you?

You can check your three credit reports for free once every 12 months at annualcreditreport.com. Dispute any errors, and contact the company that reported the incorrect information to correct it.

For example, if your credit report says that you are 30 days behind on a payment to Bank ZYX, but you’re not actually behind, dispute the error with the credit bureau and also by contacting Bank ZYX directly.

If that doesn’t work, file a complaint with us. You’ll get a confirmation number immediately, email updates along the way, and be able to check the progress online.

What’s in a credit score?

The information in your credit report is used to make a credit score, which translates this great mass of information into a single number that essentially indicates the expected likelihood of repaying a loan on time. Generally, the lower the score, the lower the likelihood you’ll repay a loan on time, compared to other consumers.

How are credit reports used?

Credit reports are used in a wide range of situations – including decisions about whether you can rent a home, and in some states, how much you pay for auto and homeowners’ insurance. Sometimes they’re even used in hiring decisions. Banks, landlords, cell phone providers, and many kinds of other companies rely on the accuracy of this information to make decisions.

What happens if there’s a mistake on my credit report?

A mistake in your credit report can cost you because it can stop you from getting the best rate you’re eligible for any time you borrow money. If there are mistakes on your credit report that make you look bad, then you could be paying more than you should be every month.

Do you have more questions about credit reports and scores or other financial questions? Ask CFPB.

Partnering in an information sharing agreement with the Navajo Nation to protect tribal consumers

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One way we further our mission to protect consumers is through appropriately sharing with state and local law enforcement agencies information that CFPB has gathered. Today, we’re announcing a new dimension in our ongoing sharing efforts. The CFPB recently signed a Memorandum of Understanding (MOU) with the Navajo Nation Department of Justice, setting out a framework for coordination and cooperation between our agencies. This is the first time that the CFPB has entered into an MOU with a tribal government.

We are excited about the opportunity to partner in enforcing federal consumer financial laws to protect consumers on the Navajo Nation. This new agreement supports our work to prevent harmful practices that target Native American consumers.

In addition to memorializing our intent to work together to protect tribal consumers, the MOU is designed to further our mutual consumer-protection goals by providing for the protected exchange of law enforcement-related information. The MOU details how the CFPB will respond to, among other things, third party requests for tribal information. Further, the MOU details the mechanism by which the Navajo Nation Department of Justice may request information from the CFPB and, if shared, protections for that information. These protections are also set forth in our federal regulations at 12 C.F.R. 1070.43 and 1070.47. Finally, as an overarching goal, the MOU confirms the confidentiality and non-disclosure of oral and written information that we share with each other.

See the full the Memorandum of Understanding.

Join us on Feb. 20th to discuss financial issues facing consumers

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Join the Consumer Advisory Board for a meeting with Director Cordray, where he’ll highlight the Bureau’s 2012 accomplishments and discuss some of the issues facing consumers.

10 a.m., Wednesday, February 20
1700 G Street, NW, Washington, D.C.

Director Richard Cordray will give remarks, followed by discussion by the Consumer Advisory Board, testimony from consumer groups, industry representatives, and members of the public.

To RSVP, email cfpb.events@cfpb.gov with:

  • Your full name
  • Your organizational affiliation (if any)

Also, take a look at the meeting’s agenda.

Your two cents on student cards and bank accounts

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College is a time when many of us signed up for our first bank account. Often schools set up agreements with financial companies to offer cards and accounts to their students. Today, some students can use their student ID card to pay for everything from washing a load of laundry to shopping online.

With credit cards, financial companies have to publicly disclose these types of agreements with schools. However, we know less about these arrangements when it comes to other things, like debit cards to access your student loan funds and student checking accounts. We’ve heard from students that sometimes these arrangements are a convenience, while other times we’ve heard that they didn’t feel they had a choice. We want to see if students are getting a good deal and what schools can do to help them through the process.

That’s why we need your help. We want to hear about your experience with financial products designed for college students.

Email us at CFPB_StudentsFedReg@cfpb.gov by March 18 to tell us about any aspect of your experience .

Today, we’re launching an initiative on student cards and bank accounts and we want your input. We’ve published a Notice and Request for Information Regarding Financial Products Marketed to Students Enrolled in Institutions of Higher Education in the Federal Register. The title might sound a little formal, but the reality is simple: we want to hear from you.

We’ll use your comments to work with school officials on ways they can make sure that schools and students are getting off on the right foot when it comes to managing their money during college. We’ll also publish a summary for everyone who contributes and let you know how you can continue to help make sure the market is working for everyone.

Tell us your two cents today, and learn more about the CFPB’s work for students.

Temporarily delaying the implementation of our international remittance transfer rule

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In November, we announced that we would be proposing to make some limited amendments to our new international remittance transfer rule. We also announced that we would be proposing to delay when the rule would take effect until ninety days after we finalized the amendment. Last month, we formally issued our proposal.

The remittance rule was slated to go into effect on February 7, 2013. Today, we are temporarily delaying the effective date of our remittance rule. Thus, the rule will not take effect on February 7. A new effective date will be announced later this year.

The changes in our December 31, 2012 proposal are designed to preserve the new consumer protections while helping remittance transfer providers comply with the rule. The proposal also includes a provision to extend the effective date until 90 days after we issue a revised final rule.

You may submit comments on the remainder of the proposal, including what the new effective date of the rule should be, on or before January 30, 2013. We’ll keep our remittance web page updated with the new effective date when we finalize the substantive issues in our proposal.

New rules, fewer runarounds for mortgage borrowers

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When you take out a mortgage loan to buy a home, you trust the mortgage servicing industry to work. Mortgage servicers are responsible for sending you bills, processing your payments, answering your questions, and addressing any problems that may arise. When servicers fall down on the job, that can have serious consequences for consumers. People who are behind on their mortgages may not know what options they have. Bills may show up with unexpected and expensive charges. People who need more information may not be able to get it in a timely manner.

Today we are issuing two new rules to make this market work better for America’s homeowners. Director Cordray announced them this morning in Atlanta.

When we proposed these rules back in August, we said we wanted to put the service back in mortgage servicing. The two final rules we’re issuing today are designed to do just that. The result of these new rules will be a market with fewer surprises and runarounds for mortgage borrowers.

Here’s some of what’s new:

Space for consumers to pursue alternatives to foreclosure

Borrowers fall behind on mortgage payments for a variety of reasons. Sometimes they can make up these payments quickly. Sometimes they need to figure out an alternative payment strategy. Sometimes they face the loss of their homes. But in any of these circumstances, they should know what avenues are available to them.

Restrictions on dual tracking: Dual tracking is the term used when servicers move forward on a foreclosure at the same time they’re working with the borrower to avoid foreclosure. Many consumers report that they have discovered too late that they were foreclosed on by the same servicer they were working with to find an alternative. Under the new rules, servicers cannot begin foreclosure proceedings against you until your payments are 120 days behind.

Pursuing modifications and other loss mitigation: The dual tracking restrictions give you time to assess your situation and apply for a modification or other option that may be available to help you. If you apply within the 120-day window, the servicer cannot begin foreclosure until your application has been addressed. If you and your servicer come to an agreement on an option, the servicer cannot start foreclosure proceedings unless you don’t uphold your end of the agreement. Even if you apply after you’re already facing foreclosure, your servicer cannot complete the foreclosure while your application is pending so long as you submit it at least 38 days before the foreclosure sale is scheduled.

Regular, clear communication from servicers

Who services your mortgage, how to get in touch with them, and what you owe should not be mysterious. The new rules include requirements to improve the communication from servicers to mortgage borrowers.

A periodic statement for homeowners: One of the new requirements defines a periodic statement for residential mortgages. The statement comes every billing cycle and covers basics like an explanation of the amount due, payment and transaction history, account information, and contact information for the servicer. It doesn’t apply to some mortgage types (like reverse mortgages), but it does apply to most home purchases and refinancings. The servicer does not have to provide you with a monthly statement if you have a fixed rate loan and pay with a coupon book, but the information that would be on the monthly statement needs to be available to you.

Early outreach when a borrower falls behind: If you become delinquent, the servicer has to make a good faith effort to reach out to you. The servicer also has to assign people to your case and make those people available by phone so you have a clear and consistent point of contact.

Warnings before interest rate adjustments: If you take out an adjustable rate mortgage, the servicer must notify you about the first interest rate adjustment at least seven months in advance of when you owe a payment at the adjusted interest rate. The servicer has to provide an estimate of the new interest rate and payment amount, alternatives available to you, and how to access a HUD-approved mortgage counselor. In addition, for the first interest rate adjustment, and all subsequent rate adjustments that result in a different payment amount, servicers must send you an additional advance notice telling you what your new payment will be.

Managing information and processing payments

Good information and good records: Servicers should provide correct information about mortgage loans, whether that’s to a borrower, an investor, or a court during foreclosure. The new rules require policies and procedures to ensure servicers can provide accurate and timely information about the mortgage. They must keep records on all mortgages they service for a year after someone pays off a mortgage or after someone else takes over servicing the mortgage.

Crediting payments in a timely manner: When you make a full payment, the servicer must credit it to your account as of that day. If you request a payoff statement in writing, the servicer has seven business days to issue the statement.

Error resolution: When there’s a mistake, you should be able to get it fixed in a timely manner. If you write to your servicer to address what you believe to be an error, the servicer should reply in a timely manner. The new rules set timelines and procedures for servicers to investigate and correct errors.

Force-placed insurance

Force-placed insurance is insurance that the servicer buys on the property when the borrower no longer has property insurance. Without insurance, whoever holds the mortgage would be at risk if the house were to be damaged or destroyed. But the borrower may actually be responsible for the costs of the force-placed insurance policy. This has led to unexpected or duplicate expenses for people who already have their own insurance policies. Under the new rules, servicers need a reasonable basis to believe borrowers lack their own insurance, and they must determine this on a case-by-case basis. The servicer also has to notify the borrower before purchasing the force-placed insurance policy and annually before renewing the policy.

These rules take effect early in 2014, along with three of the rules we issued last week. We’ve developed a page for the new rules where you can learn more about the new rules, including a detailed summary. Watch the page for new resources to help you understand the rules and their implications in the days to come.

  

The CFPB blog aims to facilitate conversations about our work. We want your comments to drive this conversation. Please be courteous, constructive, and on-topic. To help make the conversation productive, we encourage you to read our comment policy before posting. Comments on any post remain open for seven days from the date it was posted.