Monitoring your credit report and consistently filing disputes plays a significant role in maintaining a strong credit score. Recent research released by Consumer Financial Protection Bureau found that a significant number of consumers from Black neighborhoods often have more disputes on their credit reports than their white counterparts.
In 2020, FPB received more than 542,000 disputes on credit reports — more than twice the number reported in 2019. These research findings come after the three major credit reporting agencies — Equifax, TransUnion and Experian — faced criticism for the number of errors made on consumers’ credit reports. In addition, consumers face challenges in having their errors corrected.
“Families living in majority Black and Hispanic neighborhoods are far more likely to have disputes of inaccurate information appear on their credit reports,” said CFPB Director Rohit Chopra in a recent press release. “Error-ridden credit reports are far too prevalent and may be undermining an equitable recovery.”
The study found that residents of Black neighborhoods consistently face challenges with their credit reports. For instance, in credit categories such as car and student loans, credit cards and retail credit cards, Black Americans were twice as likely to have disputes present on their credit reports than white Americans.
Even more surprising: In the auto loan category, Black Americans were three times as likely to have disputes on their credits as white Americans.
Black consumers’ dispute for car loans was 2.8 percent; 2.4 percent for student loans and 4.7 percent for credit card accounts. Meanwhile, white community disputes were .8 percent, .9 percent and 2.5 percent for the same categories, according to the report.
Consumers can fight back. The Fair Credit Reporting Act makes it possible for consumers to file disputes with credit reporting agencies such as Equifax, TransUnion and Experian. These reporting agencies are required to investigate disputes and correct any inaccuracies found. By correcting inaccuracies such as late payments on credit reports, consumers are able to maintain a credit score that will qualify them to have low-interest rates, saving money over time.
However the mere presence of inaccuracies — especially among Black American consumers — could be contributing to the racial wealth gap.
