Michelle Singletary: Unlocking the credit-file vault

THE INFORMATION in our credit files has become the doorway to the world of credit, not to mention getting a job or the best insurance rates.

Yet how credit files are handled by the major credit bureaus is a mystery to many consumers. The Consumer Financial Protection Bureau (CFPB) aims to shatter some of the mystique by looking into how the three largest credit-reporting companies - Equifax, Experian and TransUnion - capture consumer-credit information.

Each credit bureau maintains files on more than 200 million adults and gets information from about 10,000 furnishers of data, the report notes. These furnishers provide information monthly on more than 1.3 billion consumer-credit accounts or other so-called "trade lines" such as auto- or mortgage-lending data that reflect a person's account status and activity. Furnishers typically report updates monthly, including changes in balances owed, whether or not payments were received, changes in available credit lines (in the cases of revolving-credit-card accounts), and the status of the account.

The study brings "more clarity to the confusing world of credit reports," said CFPB Director Richard Cordray.

About 40 percent of the data the bureaus collect comes from bank cards, such as general-credit cards, and 18 percent comes from retail-credit cards. Only 7 percent of the transaction information comes from mortgage lenders or servicers; just 4 percent comes from auto lenders.

So when people wonder why their credit scores are low, it's often tied to how well they handle the debt on their credit cards.

I wasn't surprised to learn that debt-collection issues generate the highest rate of disputes. Almost 40 percent of disputes handled by the credit bureaus can be linked to collections items.

But what really caught my attention were two findings:

* Only about 44 million consumers per year, or about one in five, obtain copies of their files. It doesn't cost you a penny to get a copy of each of your credit files once every 12 months. Just go to annualcreditreport.com, the only official site to get the free reports. It's important to stay on top of what's in your credit file. Consumers Union has a page at consumersunion.org/creditreport with information on how to get your report, how to fix mistakes in it, and why it's so important to check yours every year.

* The credit-reporting agencies resolve an average of 15 percent of consumer-disputed items internally, without getting the data-furnishers involved. The CFPB doesn't know what percentage of these resolutions turned out in the consumer's favor. The remaining complaints are forwarded to the companies that provided the original information. But the report found that the documentation that consumers present by mail to challenge inaccuracies may not be getting passed on to the companies furnishing data to the credit bureaus. I would urge the CFPB to look into this further.

I share the concern of consumer advocates about the extent to which consumer complaints are investigated by the credit bureaus. As the CFPB noted, consumer groups have long complained that creditors often just resubmit the same incorrect information and the credit bureaus will generally give that greater weight than the consumer's claims that the information is not accurate.

Last year, the credit bureaus received about 8 million contacts from consumers who wanted to dispute the accuracy of their files. Based on these contacts, the number of consumers who disputed one or more items ranged from 1.3 percent to 3.9 percent, the CFPB report said.

Although the CFPB report provides some good insight, we still don't know from an independent source to what extent credit reports contain inaccuracies that can impact people's ability to get credit, a job or insurance. That's the study I'm waiting to see.