Credit report disputes ‘much more likely’ for Black/Hispanic neighborhood residents, younger consumers

If you live in a Black or Hispanic neighborhood, or are young with a low credit score, you are “far more likely” to have a dispute appear on your credit report, according to new research released Tuesday by the federal consumer financial protection agency.

The Consumer Financial Protection Bureau (CFPB) said its research shows that majority Black and Hispanic neighborhoods continue to face significant challenges with credit records. “In nearly every credit category reviewed (auto loans, student loans, credit cards, and retail cards), consumers residing in majority Black areas were more than twice as likely to have disputes appear on their credit reports compared to consumers residing in majority white areas,” the agency said of its research in a release.

Focusing on auto loans, the CFPB said consumers in majority Black areas were more than three times as likely to have disputes appear on their credit reports (0.8% of accounts with disputes in majority white census tracts compared to 2.8% of accounts in majority Black census tracts).

CFPB Director Rohit Chopra blamed the disputes on inaccurate information appearing on credit reports for families living in Black and Hispanic neighborhoods, and for reports of younger consumers with short credit records. “Error-ridden credit reports are far too prevalent and may be undermining an equitable recovery,” Chopra said, referring to the economic recovery from the impact of the coronavirus crisis.

The bureau said the new research provides additional insight into previously observed trends. It also said the new research is a part of a series of reports focusing on trends in the consumer financial marketplace, and uses data on auto loan, student loan, and credit card accounts opened between 2012 and 2019.

CFPB Finds Credit Report Disputes Far More Common in Majority Black and Hispanic Neighborhoods