Consumers Get A Raw Deal From Credit Bureaus

Tristan Powys (Credit Counsellor) @ Lucid Living

The credit ombudsman criticised the credit bureaus for giving consumers a raw deal when trying to dispute the accuracy of information on their credit reports.

The credit ombudsman,  said the massive number of complaints he had received since the start of the 2011-2012 financial year, were related to consumers which, in most cases, were not getting appropriate service from the credit bureaus, when lodging disputes challenging errors on their credit report.

The credit ombud said that, at times, credit bureaus were referring consumers to the courts or their credit providers for assistance when disputing their credit reports and that this was against the law (set out in the provisions of the National Credit Act (NCA)).

In terms of the NCA, credit bureaus are required to take reasonable steps to seek evidence in support of the challenged information. This means that the credit bureau must investigate the validity of the information, that it publishes, with the courts or credit providers. Credit bureaus cannot make this the obligation of the consumer – that is unlawful.

Credit bureaus have to provide any consumer who challenged their credit report with a copy of evidence supporting the information. If such credible evidence is available, the information remains on the consumer’s credit report.

If the credit bureau is unable to find credible evidence backing up the information, they must remove the information from the consumer’s credit report and all record of it from their files.

The credit bureau must also issue a free copy of the amended credit report to the consumer, to confirm that the disputed information has been removed.

According to the credit ombud, “every person has the right to dispute the accuracy of the information on their credit report and a dispute reference number must be issued to consumers immediately, whether the information was disputed telephonically or in writing.”

“The best way for consumers to dispute unfair or incorrect credit information listed on their credit report is first to contact the relevant credit bureau and record a dispute by specifying the information under dispute and requesting a dispute reference number,” he added.

The issuing of a credit bureau dispute reference number would serve as proof that the consumer’s dispute had been logged and the credit bureau must correct the information or resolve the dispute within 20 business days.

Credit bureaus are required to provide the consumer with a dispute reference number – unfortunately has not been happening. If a consumer does not have a dispute reference number, they cannot escalate the matter to the credit ombud. The practice of credit bureaus not issuing dispute reference numbers, prejudices the consumer and prevents them from enforcing their rights.

In the last financial year, about 3870 disputes were opened with the credit ombud and 90% have since been closed. In almost 70% of the cases, the dispute was resolved in favor of the consumer and credit bureaus were ordered to correct the errors on consumer’s credit reports.

“It’s very important to keep track of all your communication with the credit bureau, including written communication, the telephone number used, as well as the name of the person you spoke to and the date,” the ombud emphasised. Owing to the high volume of disputes being lodged with credit bureaus may disputes are not logged or if logged are not attended to timeously or are neglected altogether. There have been many instances of disputes remaining unresolved by the credit bureaus after several months.

The credit ombud’s main aim was to ensure that innocent consumers weren’t prejudiced by incorrect or unfair credit information on their credit reports and that credit bureaus respond to consumer inquiries as they were required to by law.