Written by: Erica Sandberg
Edited by: Lillian Guevara-Castro
Reviewed by: Adam West
Nerves may be fraying over the rapid rise of the power and influence of artificial intelligence (AI) programs in many industries. Will they help or hinder, and who stands to benefit?
In the world of credit reporting and credit scoring, though, I predict that both consumer and lender will win. Dramatically. Hear me out.
For decades the three major credit reporting agencies – Experian, TransUnion, and Equifax – have struggled to ensure that the information sent to them and which they enter on consumers credit files is correct and timely. After all, data furnishers such as lenders, debt collectors, and government agencies supply these three credit bureaus with a staggering amount of data.
Keeping up and getting it all right hasn’t been easy. The credit bureaus must turn the provided data into ever updating credit reports. If what they receive is old or inaccurate, the consumer may be judged unfairly. If it doesn’t match the person’s Social Security number or name, they could end up with someone else’s data on their reports.
Despite efforts to increase credit reporting accuracy, a 2024 joint investigation by Consumer Reports and WorkMoney discovered a continuation of serious problems. Nearly half of the consumers who volunteered to check their credit reports detected mistakes. More than a quarter of the participants found serious errors related to debt that could lower their credit scores.
Adding to the frustration is that it’s usually up to the consumer to find the mistakes in the first place. That means they have to pull their credit reports and read them carefully, on a regular basis. Then, if they do spot errors that need correcting they will have to follow a dispute process. It’s time-consuming and annoying. Getting the information updated can take a month or more, further frustrating the consumer, but it’s even worse if the investigation doesn’t result in a positive remedy.
It’s important to take that action, though, because without precise information being reported, consumers will not have a credit report that reflects their accurate history or risk level. That results in unnecessary credit card, loan, financing, insurance, and housing denials. And if they do get a credit product, it may not come with the terms befitting their real credit rating.
The problem extends to credit scoring companies such as FICO. After all, their job is to enter the data listed on consumer credit reports into proprietary algorithms, then transform that information into a three-digit number. Lenders rely on these credit scores to offer credit products and set terms.
Because mistakes and reporting delays have been commonplace, anger and distrust in the system has ensued. In 2025, the Consumer Finance Protection Bureau fined Equifax $15 million over credit reporting errors, and for failing to properly investigate consumer disputes. That didn’t help the overall faith people have had that all is well in credit reporting land.
AI is changing all that. Machine learning is now streamlining the system so it runs faster, smoother, and with far fewer errors. It has the power to help the credit bureaus regain consumer trust.
Adding to the list of benefits, AI is enabling the credit bureaus to add rent and utility payments, cellphone usage and even social media activity to predict lending risk. It is not just refining the entire process, but making it more equitable. Adding such non-traditional data sources to the mix can greatly help consumers who have light or nonexistent credit history qualify for the right credit products.
On the scoring side, AI is identifying patterns and correlations that have been missed by traditional models.
As for lenders, they stand to greatly gain from AI-assisted credit reports and scores. Their aim is to get their products into consumers hands but also to keep risk to a minimum. When the reports and scores are accurate and thorough, they can better compete for a person’s business. Lenders can make faster, more objective credit decisions.
Will AI guarantee perfection? Certainly not. But after over 20 years of working with individuals who had miserable experiences with the credit bureaus and who believe their credit scores do not reflect their true risk level, I think consumers will soon be pleasantly surprised by the upcoming changes.
Yes, they still have to check their credit reports to check for accuracy and follow the dispute process if anything is amiss, but they should see fewer issues and a speedier turnaround time.
Meanwhile, a wide range of creditors will not only increase their business volume, but AI will help them identify fraud, since these systems are constantly analyzing transaction data and user behavior. Anomalies will be pinpointed immediately, and can be addressed without delay. This can help on the consumer side too, since problems associated with fraudulent activities may never make it to their credit reports at all.
Although I’m not a fan of AI in everything (in most cases, I prefer to speak with humans instead of bots and don’t get me started on robot journalism), when it comes to credit reporting and credit scoring, I’m celebrating the innovation. This is one industry that desperately needed a technological boost.
