Consumers may be one step closer to a higher credit score.
A recent report by the Consumer Financial Protection Bureau outlined a number of problems it found with the big three consumer reporting companies along with suggested reforms that could help consumers improve the accuracy of their own credit reports as well as those all-important three-digit scores.
The watchdog agency said Equifax, Experian and TransUnion had insufficient quality control systems and did not conduct reasonable investigations when consumers disputed something in their files.
The government also laid out a number of ways to improve the accuracy and operation of the credit scoring companies to prevent or fix the errors in the reports that lenders use to assess borrowers' creditworthiness and set rates. For starters, the agency advocated stricter identity-matching criteria and updating records more frequently.
Incorrect information on a credit report is the top issue reported by consumers filing a complaint, according to the CFPB.
"Equifax, Experian and TransUnion continually seek ways to ensure the data they maintain on their consumer credit files is accurate and current," Eric Ellman, interim president and CEO of the Consumer Data Industry Association, which represents the three major credit reporting companies, said in a statement to CNBC.
To that end, improved standards to new and existing public records in their databases will be implemented on July 1, the CDIA said. And as part of this change, some civil debts and tax liens will be excluded, which means some credit scores will edge higher.
Removing that negative information could boost scores for roughly 12 million consumers by up to 40 points or more, according to The Wall Street Journal citing FICO data. Analyses conducted by the credit reporting companies, along with FICO and VantageScore, showed more modest credit scoring impacts.
Credit reporting and scores play a key role in Americans' daily life. The process can determine the interest a consumer is going to pay for credit cards, car loans and mortgages — or whether they will get a loan at all.
This report comes on the heels of an enforcement action against Equifax and TransUnion and their subsidiaries, announced in January. The CFPB said then that the companies deceived consumers about the value of the scores the companies sold them.
As part of that action, the companies must pay more than $17.6 million in restitution to customers, plus $5.5 million in penalties to the government.
"Finally, after decades of problems and complaints, supervision by the CFPB has resulted in the big three credit reporting companies starting to fix, or to develop, systems to promote accurate reporting and properly correct errors," National Consumer Law Center staff attorney Chi Chi Wu said in a statement.
"This is an important first step, but it is a work in progress and could be stopped dead in its tracks if the CFPB loses its supervision powers or is otherwise hampered in its mission," she added.
The CFPB has come under fire by the Trump administration with the White House and congressional Republicans exploring ways to fire CFPB director Richard Cordray if not abolish the office altogether.
In this most recent report, the CFPB may also be trying to tout the ways they are helping consumers, said Bill Hardekopf, credit card expert and CEO of Lowcards.com. "The bottom line is, while there may be some politicking, consumers can benefit by some of those suggestions."
If the CFPB reforms fix the deficiencies in those companies' operations, consumers will benefit to the tune of potentially billions of dollars, the National Consumer Law Center said.
(Update: This story has been updated to include a comment from the Consumer Data Industry Association.)