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| Topics and Issues | Data Suppression (19) |
All,
In a blog post in May 2022, the CFPB (John McNamara) wrote that CFPB
Research uncovered that only about half of the largest credit card companies contribute data to credit reporting companies about the exact monthly payment amounts made by borrowers. It also showed that over a short period of time, several of the largest credit card companies began to suppress actual payment amount information that they had previously provided or furnished on consumers.
The blog post added that the Bureau sent letters to the CEO’s of the nation’s biggest credit card companies — JP Morgan Chase, Citibank, Bank of America, Capital One, Discover, and American Express — asking them to explain this practice, which has the potential to impact you and your ability to access credit at the most competitive rates. The post adds:
Being able to view a consumer’s actual payment amount history on their credit reports can be a valuable tool for lenders to ensure they’re offering competitive prices and the best loan terms for your money.
We know, for example, that credit card companies routinely rely on actual payment amount information when pricing or offering products to their own customers. Consumer advocates and market participants alike have flagged the distortionary impact of payment amount data suppression, particularly in hindering lenders’ ability to competitively underwrite credit. According to Fannie Mae, this information can also help provide more consumers with access to mortgage credit , particularly for those customers that fully pay their credit card bills each month. Our monitoring of credit markets suggests that the inclusion of actual payment information in credit reports could impact consumers’ credit scores by 20 points or more.
Consumers reasonably expect that they will receive competitively priced credit based on their ability to manage and repay their credit obligations. But this is impaired if actual payment information is being suppressed by major credit card companies. This isn’t the first time the credit card industry has suppressed valuable account information from credit reports. Several years ago, until regulators took action , credit card companies had stopped furnishing credit limit amounts to the credit reporting companies, creating misleading impressions of creditworthiness and making it harder for competitors to offer lower rates to their customers. Today, the practice of withholding information about consumer credit card payments is even more out of step with market and regulatory trends.
Consumers should have confidence that their information is useful, accurate and complete. Today’s request to credit card companies is one part of that effort. We’ll share what we learn about why actual payment information has largely gone missing from the nationwide credit reporting system, and what the largest credit card companies might do to fix it.