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As you may have seen, 60 Minutes ran a story on the credit reporting industry tonight, and unfortunately, much of the story was inaccurate and misleading. The focus of the segment was on data accuracy and the results of the yet-to-be released FTC accuracy study. Many parts of the story did not accurately reflect the facts that have been validated by independent third party studies, the industry’s position or Experian’s position. As such, we would like to clarify our industry position and specific allegations about Experian’s practices. The Business of Credit Reporting The core business of credit reporting agencies is ensuring the accuracy of consumer credit files. This helps lenders rapidly and accurately assess the credit risk of individual consumers and assures consumers that credit reports are an accurate reflection of their credit and repayment history. The more accurate our data, the more accurate assessment the lenders can make of consumer risk. Data Accuracy – What You Didn’t See 60 Minutes showed FTC Commissioner Leibowitz saying that one out of 10 consumers might have an error that would lower their score. To clarify, the focus of the study was on "material" errors and according to the FTC’s own study, which the Consumer Data Industry Association (CDIA) commented on, “98% of credit reports are materially accurate.” CDIA also shared with 60 Minutes that repeated studies have shown that despite the fact that billions of individual pieces of data are received and processed each year, the credit reports assembled provide highly accurate assessments of consumer credit history that both businesses and consumers can use to make informed financial decisions. They pointed to the work done by the Consumer Financial Protection Bureau who looked at the issue of credit accuracy last December. Their analysis found that only between 1.3% and 3.9% of consumers disputed information in their credit report that they believed was in error. Even that number may overstate the number of actual inaccuracies, since the study did not indicate how many of the disputes were the result of an actual error, instead of mere requests to update information or the result of dispute requests from fraudulent credit repair companies who attempt to scam consumers into disputing accurate data. They also highlighted a recent study concluded by the Policy and Economic Research Council that found only one-half of one percent found an error that would cause the consumer to pay a higher price. These studies also showed 60 Minutes that consumers who use the dispute process are generally satisfied with the results and that credit bureaus are handling disputes in a timely manner. In fact, the Policy and Economic Research Council study found that 95% of consumers were satisfied with the outcome of their disputes. Experian’s Management of Dispute Resolution 60 Minutes interviewed three former Experian employees on how they allegedly handled dispute resolutions. As we informed 60 Minutes, these are the details about the important process we employ to manage disputes: “We cannot speak to the motivation of the statements attributed to former Experian employees, particularly as the comments are out of context and simply not reflective of the way Experian runs its business. We can say without question that Experian is focused on providing the highest quality services to consumers. That commitment is reflected in consumer surveys in which 95% of consumers are satisfied with the results of their dispute requests. In addition, Experian does have procedures where its agents can and do question dispute responses directly with data furnishers. Our agents are trained to be proactive when considering information submitted by consumers; they do in fact have the ability to include supporting information provided by the consumer with each dispute. Experian does drive for efficiency in its processes in full support of consumers' needs for speed in resolving their issues. Importantly, however, our agents are empowered to resolve consumer disputes incorporating the highest quality and customer service without time parameters. Regarding the former employee’s comment that “he could not question or investigate a furnisher’s response,” that is simply not true. We utilize a specialized platform, created by our industry and mandated by federal law, for our agents to effectively communicate with data furnishers when processing disputes. The document that the agent reviews includes both the consumer’s dispute as well as the data furnisher’s response. If the agent feels that the response is unclear, they are empowered to phone verify the response. This has been our agents’ process for many years. Consumers need speed in resolving their disputes, and we direct our efforts toward that goal. We complete dispute processing in 14 days on average, well below the required 30 day turnaround required under federal law.” Accusations of Breaking the Law Among the glaring errors, Ohio Attorney General Michael DeWine stated that companies in the industry are in violation of the Fair Credit Reporting Act. This statement demonstrates both a misunderstanding of the law and the efficacy of our dispute systems. Experian is in full compliance with all relevant laws and regulations. And, from an industry perspective, Federal courts have found no violations on multiple occasions. Further, Congress directed the Federal Trade Commission to conduct a year-long review of the dispute process and they did not find any violations of law. This industry is under continuous scrutiny, but we at Experian do not let that deter us from our commitments. We know there is always more work to do to make the system better, and rest assured, this is core to our commitment. We have a long history of doing what’s right for the consumer. I would invite you to visit “Our Commitment” to learn about how we approach data accuracy, customer service and consumer education.
As the global leader in the credit business, it’s our responsibility to assist lenders in managing consumer credit risk, and importantly, to empower consumers to understand and responsibly use credit in their financial lives. These responsibilities require a commitment – a commitment from us to play a leading role in helping consumers understand the fundamentals of credit management and how they can benefit from this growing marketplace reliant upon credit. To do this, we continually invest in processes and products that help consumers throughout their credit journey. Experian has created a long-standing culture of commitment to evolve with the changing marketplace and demands of consumers (and the credit industry). We have a proven track record of continual improvements to our systems over the years, including: We’ve invested millions of dollars annually upgrading our systems and processes in pursuit of “error-free” data; We were the first credit reporting agency (CRA) to add rental payment history to credit reports; We empowered our call center operators to stay on the phone with consumers as long as it takes to answer their questions; and, We were the first CRA in the U.S. to launch a nationwide financial education campaign. These are just a few examples – and while we are proud of them, we are not sitting idle and resting on these efforts alone. We are constantly striving to make our data as accurate, complete and current as possible to service the needs of consumers and lenders. We know there is always more work to do to make this system better, and rest assured, this is core to our commitment. The world of consumer credit is evolving, and it’s up to Experian (and the industry) to continue looking at ways to make it better. This is a business – but we realize that consumers are at the core of why we are in business in the first place. We are dedicated to helping consumers throughout their journey in this fast-changing world of consumer lending. This is our culture. This is our commitment. I invite you to hear directly from our employees and our partners about our culture and our commitment at www.experian.com/ourcommitment. Photo: Shutterstock
As of 2011, the Hispanic population comprised 16.7% of the United States population, the largest minority group following African-Americans. In addition, 20.3% of U.S. households speak a language other than English. Recognizing the need for expanded financial resources to the Hispanic community, Experian provided a generous grant to translate the NFCC’s MyMoneyCheckUpTM tool into Spanish. The resource provides consumers with a means of evaluating four key areas of personal finance: budgeting and credit management, saving and investing, planning for retirement and home equity. The tool is now available in Spanish at MiAyudaFinanciera.org and Debtadvice.org. “Experian is pleased to work with the NFCC Member Agencies in helping families improve their financial capability and in making this valuable tool available to a wider audience,” said Maxine Sweet, Experian vice president of public education. “We have a shared goal of helping everyone learn to live credit smart. That starts with a clear understanding of your financial position and having readily accessible tools to help guide your future.” Experian has supported the NFCC’s outreach from its earliest days, with representatives previously serving on its Board of Directors, Advisory Council, Education committee and the boards of member agencies across the nation. We recognize the valuable role of the NFCC and its member agencies in helping consumers recover from debt and that they share our passion for educating consumers to live credit smart. To learn more about Experian’s financial education resources, please visit LiveCreditSmart.com. Photo: Shutterstock
Today, we stand at the forefront of a digital revolution that is reshaping the financial services industry. And, against this backdrop, financial institutions are at vastly different levels of maturity; the world’s biggest banks are managing large-scale infrastructure migrations and making significant investments in AI while regional banks and credit unions are putting plans in place for modernization strategies, and fintechs are purpose-built and cloud native. To explore this more, I recently had the privilege of attending the annual Reuters NEXT live event in New York City. The event gathers globally recognized leaders across business, finance, technology, and government to tackle some of today’s most pressing issues. On the World Stage, I joined Del Irani, a talented anchor and broadcast journalist, to discuss the future of lending and the pivotal role of data and AI in building a more inclusive financial system. Improving financial access Our discussion highlighted the lack of access to traditional financial systems, and the impact it has on nearly 100 million people in North America alone. Globally, the problem affects over one billion people. These people, who are credit invisible, unscoreable, or have subprime credit scores, are unable to secure everyday financial products that many of us take for granted. What many don’t realize is, this is not a fringe subset of the population. Most of us, myself included, know someone who has faced the challenges of financial exclusion. Everyday Americans, including young people who are just starting out, new immigrants and people from diverse communities, often lack access to mainstream financial products. We discussed how traditional lending has a limited view of a consumer. Like looking through a keyhole, the lender’s understanding of the person in view is often incomplete and obstructed. However, with expanded data, technology, and advanced analytics, there is an opportunity to better understand the whole person, and as a result have a more inclusive financial system. At Experian, we have a unique ability to connect the power of traditional credit with alternative data, bringing a more holistic understanding of consumers and their behaviors. We are dedicated to leveraging our rich history in data and our expertise in technology to create the future of credit and ultimately bring financial power to everyone. The future of lending After spending two days with over 700 industry leaders from around the world, one thing is abundantly clear: much like the early days of the internet, today, we are at the cutting-edge of a technical revolution. Reflecting on my time at Reuters NEXT, I am particularly excited by the collective commitment to drive innovative, and smarter ways of working. We are only beginning to scratch the surface of how data and technology can transform financial services, and Experian is positioned to play a significant role. As we look to the future, I am excited about the ways we will create new opportunities for businesses and consumers alike.
We believe that financial literacy leads to empowerment. That is why Experian supports initiatives and partners with community organizations to deliver financial education. We also develop products and services that give more control to consumers over their credit profile and financial health. As part of advancing our mission of Financial Power to All®, we are proud to announce we are helping more than 5,000 Hispanic individuals nationwide by relieving $10 million dollars of consumer debt. To provide families with this boost, we joined forces with ForgiveCo, a Public Benefit Corporation (PBC), to administer the acquisition and cancellation of qualifying consumer debt for the selected recipients. Beneficiaries will also receive a one-year premium Experian membership for free that offers access to their Experian credit report in English and Spanish[i], FICO® Score[ii], bilingual educational content, and other financial resources. We hope this effort helps raise awareness of the importance of financial literacy for everyone, and that Experian has resources to help individuals reach their financial dreams. To amplify the message, we collaborated with multi-platinum, award-winning singer and songwriter Prince Royce and you can see his video here. In fact, we have been making a concerted effort the last several years to evolve our educational resources and products to better support all underserved communities. Some of our other activities include the creation of the B.A.L.L. for Life initiative that connects African American and Hispanic youth with financial education, supporting scholarships for Asian Americans through the Ascend organization, providing custom resources for Out & Equal and Born This Way Foundation for the LGBTQ+ community, supporting the NextGen Innovation Lab for Disability:IN, and sponsoring credit counseling for the military community with Operation HOPE. For resources in Spanish, Experian offers a credit e-book and consumers can access a full suite of articles at the Ask Experian blog here. [i] Only Experian credit reports are available in Spanish. All other services associated with an Experian membership are available in English only. English fluency is required for full access to Experian’s products. [ii] Credit score calculated based on FICO® Score 8 model. Your lender or insurer may use a different FICO® Score than FICO® Score 8, or another type of credit score altogether. Learn more.
Amid some of the financial challenges that underserved communities experience, members across the financial services community remain committed to championing initiatives and programs that drive greater financial inclusion. In fact, collaboration has led to the inclusion of non-debt related payment information on consumers’ credit profiles, as well as digital services that make it easier to manage money. These efforts have helped to broaden access to fair and affordable financial resources for more individuals. While significant progress has been made, there is still more work to do. However, some of the misconceptions and myths about the financial services community are hindering further advancement. Debunking these myths will accelerate progress by building trust between the financial services community and consumers. Person withdrawing money from ATM contactless Myth #1: “Financial institutions have no interest in underserved consumers or credit invisibles.” The truth is, banks and credit unions want to say “yes” to more prospective borrowers, including individuals and families from underserved communities. Beyond being the right thing to do, it’s an opportunity to potentially build lifelong relationships with a relatively untapped market. A show of good faith to communities who have largely been ignored by the financial system could lead to customer loyalty that may extend to their family and friends. That’s why participants across the financial ecosystem have been proponents of including expanded data sources—such as on-time telecom, utility and video streaming service payments—on to consumer credit reports, as well as exploring other Fair Credit Reporting Act (FCRA)-regulated data sources, including payment data on short-term small dollar loans and expanded public records data. Making this data more accessible to lenders provides a more comprehensive view of a consumer’s ability and willingness to repay outstanding debt—an actionable solution to extending credit to consumers without lenders taking on additional risk. Myth #2: “There is a lack of trustworthy financial education resources.” The financial services community and affiliated organizations recognize that empowering people with financial knowledge and skillset are critical to consumers’ financial success. In fact, banks and credit unions are partnering with nonprofits and non-governmental organizations to better understand the unique challenges and opportunities within specific communities and provide relevant tools and resources. For example, Experian’s B.A.L.L. for Life (Be A Legacy Leader) program, launched in partnership with the National Urban League, serves as a catalyst for engaging with Black communities and low-income youth through live events and digital financial education. Subject matter experts, professional athletes, celebrities, and other influencers share their experiences and expertise, covering topics such as banking, credit, financial management and investing. In addition, to help people improve their financial management, Experian partners with the National Foundation for Credit Counseling (NFCC). The NFCC connects consumers with certified financial counselors to help them address various pain points, including debt management, homeownership, student loans or small business cash flow issues. Myth #3: “Underserved communities have few opportunities to build credit and enter the mainstream financial system.” People from underserved communities, as well as younger consumers and recent immigrants are often excluded from the mainstream financial system because they lack an extensive credit history. Historically, it’s created a vicious cycle; in order to get credit, you have to have credit. Fortunately, there has been a sea change in innovative solutions to address the specific needs of these populations. These include new credit scoring models and microfinancing which provide financial services to individuals who may have been excluded from traditional banking systems. In addition, by incorporating expanded data sources, such as telecom, utility and residential rental payments onto credit reports, lenders have more visibility into consumers who may have been excluded by traditional credit scoring methods.These programs help individuals and families from underserved communities establish and build a credit history that could enable loans, or the ability to rent an apartment or open their dream business. An example is Experian Boost®, a free feature that allows Experian members to contribute their history of making utility, cellphone, insurance, residential rent and video streaming service payments directly into their Experian credit profile. By incorporating nontraditional credit data like paying utility bills on time, online banking transactions, rental payments and verified income data, more people can establish a credit profile that can potentially qualify them for a loan. More Inclusion, Fewer Myths It’s encouraging that community organizations and banks are beginning to see the economic and social benefits of aligning on financial literacy and inclusion. As more initiatives come online, underserved populations will be able to establish a better financial foundation. Then, we can declare the myths to be history.