The three major credit bureaus—Experian, TransUnion, and Equifax—play a pivotal role in Americans’ credit histories. When consumers apply for credit cards or loans, lenders generally rely on the data maintained by these bureaus to assess creditworthiness. If an individual’s payment data isn’t reported to any of these bureaus, they essentially have little to no credit history. This predicament can lead to challenges in securing necessary financial products. Recently, however, these bureaus have severed their data-sharing partnerships with TomoCredit, a San Francisco-based startup heralded for its potential to improve consumer credit scores through innovative methods, including the reporting of rent and utility payments. Consumer feedback about Tomo’s services has been largely negative, particularly concerning difficulties in canceling subscriptions and the non-appearance of its reported credit lines in consumer credit histories.
Forbes has investigated the situation, uncovering troubling trends surrounding TomoCredit and its relationships with the three credit bureaus. Though TomoMarket claimed to help consumers build credit histories, complaints from users have been extensive, primarily focused on the apparent ineffectiveness of the service. In recent reviews, numerous users expressed frustration that their credit lines from Tomo never appeared on their credit reports, despite the company’s assurances. This situation indicates a significant problem not only for TomoCredit’s credibility but also raises concerns about its operational practices. The company’s CEO, Kristy Kim, did respond to some inquiries but provided vague assurances of the company’s commitment to connecting borrowers with traditional lenders, neglecting to address the specific criticisms laid out in consumer complaints.
Despite its claims, evidence suggests that TomoCredit’s data is no longer accepted by the bureaus. Reports indicate that since August 2024, there are virtually no credit lines from Tomo appearing in the records maintained by any of the three bureaus, a sharp decline from earlier in that year when thousands of lines were reported. Compounding the concern, there are indications that bureaus have begun purging previously accepted Tomo data from their consumer credit histories. The repercussions of this development are significant, not only for Tomo’s future but also for the consumers who had relied on its services. The ongoing deactivation by Equifax and the removal of Tomo’s branding from both Experian and TransUnion websites are clear indications that the troubled startup is facing a fallout from these relationships.
The rationale behind the credit bureaus’ decisions remain somewhat ambiguous. Financial services attorneys have noted that such terminations or data purges typically arise from concerns over data reliability or compliance issues. For instance, a high rate of consumer disputes regarding inaccuracies in reported information can raise red flags for the bureaus. If a data provider regularly fails to respond to these disputes or handles them uniformly, this could further lead to increased scrutiny. More troublingly, serious breaches such as submitting fraudulent credit history data could prompt immediate cessation of partnerships, although there is currently no evidence suggesting Tomo engaged in such practices.
Regulatory pressure is another significant factor influencing the credit bureaus’ decisions. The Consumer Financial Protection Bureau (CFPB) has been scrutinizing the practices of credit furnishers like Tomo, focusing on their compliance with the Fair Credit Reporting Act. During a recent examination, the CFPB noted deficiencies in how various furnishers, potentially including Tomo, managed consumer disputes and provided accurate data. This heightened regulatory vigilance places additional pressure on credit bureaus to ensure their data sources meet acknowledged standards, compelling them to sever ties with any provider that appears to falter in this regard.
The ramifications of this unfolding scenario extend beyond just TomoCredit itself. Consumers like Jasmine Burch from California and Felisa Ware from Michigan reflect a broader reality, as many have found themselves in situations where the financial tools intended to help improve their creditworthiness have left them disillusioned and without the anticipated benefits. The disruption of reporting from Tomo has resulted in missed opportunities for many, and underscores the critical need for robust oversight in the credit-building fintech space. Continued investigations and regulatory actions are needed to protect consumers and ensure that credit bureaus only partner with reliable data sources, thus restoring faith in the credit reporting ecosystem.