Data from the U.S. Public Interest Group show consumer complaints about credit report errors surged by 60% year-over-year in 2020. It’s due in part to creditors reporting consumers as late on payments even though they allowed them to skip amid COVID-related job losses.
Ripple effects of the COVID-19 pandemic keep coming, and your credit report could be one of the victims.
The U.S. Public Interest Research Group, a consumer advocacy organization, has studied the number of complaints the Consumer Financial Protection Bureau (CFPB) received in 2020 versus 2019 regarding credit reporting errors and found that in every month, last year’s complaint numbers beat – or often shattered – the previous year’s level.
The smallest month-over-month change from 2019 to 2020 was a 24% increase in February. But starting in April, numbers were up 50% or more every month, and in December, rose by a whopping 124% compared to the previous December.
Overall, 2019 saw a total of approximately 277,000 complaints about credit reporting errors, while these complaints clocked in at more than 444,000 throughout 2020, for an annual increase of more than 60%.
U.S. PIRG explains that the huge uptick in complaints is due in large part to errors in credit reporting triggered by pandemic policies that allowed consumers to skip certain payments.
Congress’ CARES Act passed in March, the legislation that provided the first stimulus checks also instructed mortgage and student loan lenders to allow borrowers to put their payments on hold. Auto loan and credit card companies then voluntarily followed suit.
But even though the CFPB instructed lenders to report these loans and debts as “current” while consumers were in relaxed repayment schedules, many of the lenders and loan services erroneously reported the skipped payments as “late” to the three credit bureaus. Consequently, some consumers who had skipped payments with permission saw their credit scores nonetheless take a hit.
When looking at 2020s credit reporting complaints post-CARES Act, calculated from April 1 through the end of the year, the increase over 2019’s complaint numbers is 69%.
U.S. PIRG’s analysis was released March 1.