CFPB Analyzes Dispute Trends on Credit Reports

Consumers that live in neighborhoods where the majority of individuals are African-American or Hispanic, or who are delinquent on their payments, or who are younger, or who have lower credit scores are the individuals who are most likely to dispute items on their credit reports, according to an analysis conducted and released by the Consumer Financial Protection Bureau.

Nearly 40% of individuals who disputed their auto loans were delinquent at the time the dispute was filed, compared with 38% of retail credit card holders, 33% of student loan borrowers, and 21% of credit card holders, according to the report. On average, an account was reported for 847 days before a consumer filed a dispute.

The CFPB also looked at what happened after a dispute was filed, analyzing the four different possible outcomes — the dispute code is removed, the account is deleted, the account is closed, and the account stops being updated.

Significantly more student loan accounts are deleted after a dispute has been filed, possibly due to the “inconsistent reporting of student loans,” the CFPB noted in its report.

Another interesting trend the CFPB noted was the difference in the number of accounts where the dispute code was removed on regular credit cards compared with retail cards. The potential discrepancy may be due to consumers disputing individual charges on regular credit cards, the CFPB hypothesized. Ultimately, “it is not clear whether this is because of the disputes being of a different nature compared to general purpose cards or whether consumers are more likely to close a retail card that has disputed information since they likely are not relying on that account as a primary means of payment.”

Consumers in neighborhoods that are identified as being Majority African-American and Majority Hispanic were significantly more likely to dispute an item on their credit report.

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