According to the Consumer Financial Protection Bureau, some credit-reporting agencies do not pass along all relevant information to creditors when consumers decide to dispute the contents of their credit reports. Laws require that adequate information be passed on, and a spokesperson for the CFPB said that the government is going to ensure that these laws are followed.

In particular, the CFPB is authorized to inspect the three biggest credit-reporting organizations: Experian Information Solutions, TransUnion, and Equifax Information Services. These agencies collect information from creditors and process it to produce consumer credit scores. These scores reflect one's ability to borrow in the lending marketplace.

In general, credit-reporting agencies notify creditors of any consumer complaints, but they may fail to pass along supporting documentation that the consumer provides.

So far there have been no specific allegations of regulatory violations, but lawmakers and officials are concerned about the balance of power favoring the large credit-reporting agencies. The dynamic can make it difficult for consumers to correct misinformation.

But this is not necessarily just a case of big business failing to consider the little guy. When consumers make complaints and correction requests, they often fail to recognize the legal restraints under which credit-reporting agencies operate. Consumers will often talk about their finances in general, which often include accounts held with multiple organizations.

By law, the credit-reporting agencies cannot pass along the consumer's entire explanation when it contains information that does not pertain to the recipient. For example, when a consumer writes a letter that contains information concerning accounts in several banks, the agency has to edit or rewrite the information in such a way that it only pertains to the particular bank to which they send it.

Consequently, it may be beneficial for some borrowers to bring their disputes directly to the lender, rather than going through the credit-reporting agency.

One particular concern that was raised was the belief that credit-reporting agencies have become too powerful, and do not adequately address the needs of the consumer. Indeed, many consumers fear bankruptcy, for the negative effects it can have on one's credit score. But there are many perfectly legitimate reasons for which a person may declare bankruptcy, such as a sudden burden of medical bills following an accident. In such cases, declaring bankruptcy is the best way to erase debt and get back on a firm financial footing.

Source: MSN Money, "U.S. to review consumer credit-reporting complaint reporting process," Sarah N. Lynch, Dec. 19, 2012