By Marcia Tal
Credit washing is a growing problem that is impacting the entire financial services sector, from lenders to credit bureaus. Fraud in general is on the rise. Data from the Identity Theft Resource Center showed over 365,000 identity theft cases in the first quarter of 2025 alone.
As a form of fraud, credit washing has seen a dramatic spike over the last five years. Consumers dispute negative information on their credit report, often claiming identity theft. Their goal is to remove legitimate and accurate credit data from credit profiles to inflate their credit score.
The practice has become a costly challenge for the industry. Major credit bureau TransUnion reported that about $10 billion in debt was erased from credit reports this year alone. These rising incidents are driven by a variety of debt settlement practices, in many cases performed by bad actors — some of which are actually AI bots. These cause an artificial increase in credit scores, impacting lenders’ ability to accurately assess a consumer’s risk. Many institutions are now reporting increased losses from unpaid debt while also contending with the higher operational costs triggered by manual dispute investigation.
In response, major credit bureaus have introduced tools to help lenders recognize atypical suppressions. Things like trade line deletions, or new credit acquired shortly before default are some common signs of credit washing behavior. In addition, credit bureaus have access to all consumer disputes, a source of predictive signals that can complement existing flagging actions. The opportunity lies in identifying these signals earlier.
Customers Tell You What They’re Going To Do
Every financial services organization has a trove of customer narrative data, and much of it goes untapped. Look a little closer though, and we can see signs of credit washing embedded in customer complaints.
Indeed, institutions can address suppressions even more proactively by digging deeper within their own dispute data. Using AI modeling, some of the topics identified in consumer disputes focus on removing an account from the credit report, disputing information, fraud and identity theft, and legal violations.
Recognizing The True Value Of Customer Narrative Data
Credit bureaus have unique capabilities to detect patterns indicative of credit washing, and their solutions can be enriched by a key, predictive piece of information: customer dispute narratives.
Words matter and can provide the early signals that lenders need to address credit washing behavior.
Now is the time.
Marcia Tal is the CEO of Tal Solutions.