TransUnion's Credit Washing Solution: A Consumer Protection Crisis Hidden Behind AI

Writer: Joeziel Vazquez 

CEO & Board Certified Credit Consultant (BCCC, CCSC, CCRS) 

17 Years Experience 

Published: November 20, 2025 | Last Updated: November 20, 2025 

Reading Time: 12 minutes

TransUnion recently announced what they're calling an industry breakthrough: a machine learning solution designed to identify consumers engaging in credit washing practices. On the surface, this innovation sounds like a win for lenders who want to accurately assess risk. But when you dig beneath the marketing language, a troubling reality emerges that should concern every American who values their consumer rights under federal law.

The credit bureau is positioning this technology as a protective measure for financial institutions, claiming it will help them identify hidden risks in consumer credit profiles. What they're not openly discussing is how this system fundamentally undermines consumer protections enshrined in the Fair Credit Reporting Act since 1970, and how it may be quietly tracking deleted information that should legally disappear from consideration entirely.

What TransUnion Is Really Tracking

In November 2025, TransUnion launched their Credit Washing Solution, describing it as a way to combat consumers removing legitimate, accurate debt from their credit reports. According to their press release, the system uses three primary detection methods: a Credit Washing Default Score powered by machine learning, Tradeline Washing Attributes that track changes in reported charge-offs across multiple time periods, and Inquiry Washing Attributes that monitor hard inquiry patterns.

The stated goal is noble on paper. The company claims roughly 5% of U.S. consumers have had charged-off accounts suppressed for atypical reasons in 2025, representing an estimated $10 billion in debt removed from credit reports. They report a 700% increase in consumer-initiated charge-off suppressions over two years and a 200% increase in lender-initiated suppressions over four years.

But here's where the situation becomes deeply problematic for consumers: this technology isn't just identifying current disputes. It's creating what amounts to a shadow credit history by tracking patterns of previously disputed and deleted information, then using that historical suppression behavior to flag consumers as higher risk going forward.

The FCRA Problem Nobody Is Talking About

The Fair Credit Reporting Act establishes clear rules about consumer rights, including the fundamental right to dispute inaccurate, unverifiable, or incomplete information on credit reports. When information is successfully disputed and removed, the law intends for that data to no longer factor into credit decisions. The entire premise rests on consumers having the ability to challenge questionable reporting and lenders making decisions based solely on what appears on current credit reports.

TransUnion's new system appears to circumvent this protection by maintaining algorithmic memory of suppression patterns even after items are legally removed from reports. The Credit Washing Default Score uses machine learning to identify consumers with a history of charge-off suppression, then predicts their likelihood of defaulting on new accounts within 12 months based partly on this suppression history.

Think about what this means in practice. A consumer successfully disputes an unverifiable debt under their FCRA rights. The item is removed from their credit report as required by law. But TransUnion's algorithm has now flagged that removal as suspicious behavior. That consumer may face higher scrutiny on future credit applications, not because of what appears on their current credit report, but because of an algorithmic judgment about their past exercise of legal rights.

This creates a dangerous precedent where your history of disputing questionable debts becomes itself a risk factor, potentially discouraging consumers from exercising their rights under federal law. If every successful dispute generates an invisible flag that follows you, the chilling effect on consumer advocacy becomes obvious.

When Legitimate Rights Become "Suspicious Activity"

TransUnion repeatedly emphasizes in their communications that credit washing differs from legitimate disputes of inaccurate information. Steve Yin, their global head of fraud, stated that removing or correcting inaccurate or illegitimate credit data is important consumer protection, while credit washing involves suppressing accurate data to present as a lower-risk borrower.

This distinction sounds reasonable until you understand how actual credit disputes work in reality. The FCRA requires credit bureaus to investigate disputes within 30 days. During that investigation, the disputed information may be temporarily suppressed while verification occurs. If the furnisher cannot verify the information, it must be permanently removed. This process is fundamental to consumer protection.

The problem is that TransUnion's system appears to treat many legitimate uses of this process as suspicious. Their algorithms flag atypical patterns of suppression, but what defines atypical? The technology monitors suppression behavior across six lines of business and multiple time periods, creating risk scores based on these patterns. A consumer who successfully disputes multiple unverifiable debts, perhaps after experiencing identity theft or systematic reporting errors by a particular creditor, could easily trigger these algorithmic red flags despite acting entirely within their legal rights.

The system essentially presumes guilt from the exercise of legal rights. Instead of proving that suppressed information was accurate before penalizing a consumer, it creates predictive risk scores based on the mere fact that suppression occurred, regardless of whether those items were legitimately inaccurate, unverifiable, or obsolete.

The Machine Learning Problem That Creates Permanent Records

Machine learning systems are only as unbiased as the data used to train them. TransUnion's Credit Washing Default Score uses historical patterns to predict future behavior. This means the algorithm is learning from past suppressions and applying those lessons to flag current and future consumers.

Here's why this should alarm anyone who understands how credit reporting is supposed to work under federal law. When information is successfully disputed and removed under the FCRA, the legal expectation is that the consumer should not be penalized for that deletion. The debt should vanish from consideration as if it never existed on the report. But machine learning systems don't forget. They aggregate patterns, identify correlations, and build predictive models from historical data.

TransUnion's system isn't just noting that a particular account was disputed. It's building a behavioral profile based on patterns of disputing, including the timing, frequency, and types of accounts involved. This algorithmic profile becomes a form of permanent credit history that exists outside the traditional credit report structure and potentially outside the protections of the FCRA itself.

The company offers these tools as add-ons to credit and model reports, meaning lenders can access this suppression history analysis even when the actual suppressed items no longer appear on standard credit reports. This creates a two-tiered credit system where some lenders have access to algorithmic judgments about your dispute history while you, the consumer, cannot see or challenge how that algorithm interprets your actions.

Why This Might Violate the Spirit and Letter of FCRA

The Fair Credit Reporting Act exists because Congress recognized that inaccurate credit reporting could devastate consumers' financial lives. The law requires reasonable procedures to ensure maximum possible accuracy and provides consumers with rights to dispute and correct errors. It also limits how long negative information can remain on credit reports, with most items falling off after seven years.

TransUnion's Credit Washing Solution potentially violates several principles underlying the FCRA. First, by maintaining algorithmic memory of deleted items through suppression pattern analysis, it effectively circumvents the intended consequence of successful disputes. Information that should disappear from consideration continues to influence credit decisions through predictive modeling.

Second, consumers have no meaningful ability to challenge or even see the algorithmic judgments being made about their dispute patterns. Traditional credit reports must be disclosed to consumers who can then dispute inaccuracies. But how do you dispute an AI model's conclusion that your pattern of successful disputes indicates elevated risk? The score itself becomes an opaque judgment that lacks the transparency required by consumer protection law.

Third, the system may improperly classify legitimate FCRA activity as fraud-adjacent behavior. The law explicitly provides consumers the right to dispute any information they believe is inaccurate, incomplete, or unverifiable. Lenders furnishing information must investigate and either verify or remove challenged items. Creating predictive risk models that treat the exercise of these rights as a red flag fundamentally undermines the purpose of providing those rights in the first place.

Consumer protection attorneys have long argued that credit bureaus should not be allowed to maintain records of deleted information in ways that continue to impact consumers. While TransUnion claims their tool focuses on suppression patterns rather than the content of suppressed items, the practical effect is the same: consumers are being judged for information that was legally removed from their credit reports.

The Hidden Costs for Consumers Who Exercise Their Rights

Beyond the legal concerns, TransUnion's technology creates real-world consequences that will fall hardest on vulnerable consumers. People who have genuinely experienced reporting errors, identity theft, or creditor mistakes now face algorithmic suspicion for cleaning up their credit files. Those who have successfully disputed unverifiable collection accounts may find themselves flagged as higher risk, potentially facing loan denials, higher interest rates, or additional scrutiny during credit applications.

Consider a consumer who was a victim of identity theft. Under FCRA Section 605B, they have the right to place an identity theft block on fraudulent accounts. Successfully blocking multiple fraudulent accounts would create exactly the kind of suppression pattern TransUnion's algorithms might flag as suspicious credit washing. Instead of being protected as a fraud victim, they could be algorithmically labeled as a risk based on their successful use of identity theft remedies.

Or consider a consumer whose accounts were incorrectly reported by a furnisher experiencing systematic data problems. Perhaps a debt collector repeatedly violated Metro 2 reporting standards or a creditor failed to update account statuses properly. When that consumer successfully disputes multiple accounts from the same problematic furnisher, their pattern of successful disputes could trigger credit washing flags, even though they were simply correcting institutional errors.

The chilling effect cannot be overstated. If consumers begin to understand that exercising their dispute rights may create invisible algorithmic flags that follow them indefinitely, many will simply accept inaccurate reporting rather than risk being classified as a credit washer. This outcome directly contradicts the policy goals underlying the FCRA, which sought to empower consumers to correct errors and ensure accurate credit reporting.

What Consumers Can Do to Protect Themselves

Despite these concerning developments, consumers are not powerless. The first and most important step is understanding that you absolutely still have the right to dispute inaccurate, incomplete, or unverifiable information under the FCRA. Do not let fear of algorithmic retaliation prevent you from exercising fundamental consumer rights.

When disputing credit report errors, be thorough and strategic in your approach. Document everything carefully, including why you believe information is inaccurate or unverifiable. Provide supporting evidence when possible. The more substantive your disputes, the harder it is for anyone to characterize them as frivolous or part of credit washing schemes.

Consider working with a legitimate, ethical credit repair company that operates in full compliance with the Credit Repair Organizations Act and Telemarketing Sales Rule. Companies that follow proper procedures and only dispute genuinely questionable information help differentiate their clients from individuals engaged in fraudulent credit washing. Look for companies with board-certified credit consultants who understand both consumer rights and proper compliance procedures.

Stay informed about how credit bureaus are using your data. Request your credit reports regularly from all three major bureaus and review them carefully. While you may not be able to see the credit washing risk scores being applied to your profile, you can document your dispute history and ensure you have legitimate reasons for every challenge you file.

Most importantly, advocate for stronger consumer protections at the legislative level. Contact your representatives in Congress and urge them to update the FCRA to explicitly address algorithmic credit scoring that relies on dispute history. The law was written in 1970 and significantly updated in 2003 through the FACT Act, but it does not contemplate machine learning systems that maintain shadow records of deleted information.

The Need for Legislative Action and FCRA Strengthening

The emergence of TransUnion's Credit Washing Solution highlights how technological advances are outpacing consumer protection law. Congress needs to act to ensure that the fundamental rights established by the FCRA remain meaningful in an era of artificial intelligence and predictive analytics.

Lawmakers should consider several specific reforms. First, explicitly prohibit credit bureaus from maintaining any records, algorithmic or otherwise, of successfully disputed and deleted information in ways that continue to impact consumers. If information is removed following proper FCRA procedures, that deletion should be absolute, with no continued consideration through pattern analysis or machine learning models.

Second, require transparency in algorithmic credit scoring. Consumers should have the right to know when decisions are being influenced by AI models analyzing their dispute patterns, and they should have meaningful opportunities to challenge those algorithmic conclusions just as they can dispute traditional credit report entries.

Third, strengthen penalties for credit bureaus that discourage legitimate dispute activity. If systems are designed in ways that chill consumers' exercise of FCRA rights, whether intentionally or as a side effect, those systems should face regulatory scrutiny and potential sanctions.

Fourth, mandate regular audits of machine learning credit risk models to ensure they don't systematically discriminate against consumers who exercise their legal rights under federal consumer protection law. These audits should be conducted by independent parties with expertise in both credit law and algorithmic fairness.

The Federal Trade Commission and Consumer Financial Protection Bureau have authority to enforce the FCRA and could potentially take action against practices that undermine consumer rights, but clear legislative guidance would provide stronger protections. Consumer advocacy groups should prioritize pushing for these updates as part of broader financial reform efforts.

How Credlocity Approaches Credit Repair Ethically

In an industry plagued by predatory practices and companies that promise impossible results, Credlocity takes a fundamentally different approach grounded in legal compliance and consumer education. As the CEO and founder who was personally victimized by Lexington Law's fraud in 2008, losing $1,847 to a company that did nothing but send generic dispute letters, I built Credlocity specifically to be the ethical alternative consumers deserve.

We operate strictly within the confines of the Credit Repair Organizations Act and the Telemarketing Sales Rule, which means we do things other credit repair companies won't. For example, we do not take clients over the phone and charge them immediately. Under the TSR, credit repair companies that sell services via phone must wait six months before charging fees. We avoid this issue entirely by only accepting online enrollments after consumers have had time to review our services and make informed decisions.

Every Credlocity client receives a 30-day free trial to evaluate our services without risk. We also offer a 180-day money-back guarantee because we're confident in our results. Unlike companies that charge upfront fees and then deliver minimal service, we provide monthly one-on-one meetings with every client, monthly budgeting assistance included in all plans, and app access so you can monitor progress in real time.

Our company is Hispanic-owned, minority-owned, women-owned, and LGBTQAI+-owned, reflecting our commitment to serving diverse communities often targeted by predatory financial services. In 17 years, we've served over 79,000 clients and successfully removed $3.8 million in unverified debt from consumer credit reports by following proper dispute procedures under the FCRA.

Most importantly, we only dispute information that appears questionable, unverifiable, or inaccurate based on careful analysis. We don't engage in credit washing schemes that involve disputing accurate information simply to temporarily boost scores. We educate clients about their rights, help them understand credit reporting requirements, and build long-term financial health rather than pursuing short-term score manipulation.

When companies like TransUnion deploy technologies that treat legitimate consumer advocacy as suspicious, it becomes even more critical to work with credit repair professionals who understand how to navigate these systems while protecting your rights. Our board-certified credit consultants stay current on industry developments and regulatory changes so we can adapt our strategies to protect clients in an evolving credit landscape.

Understanding What Credit Repair Can and Cannot Do

Consumers deserve honesty about credit repair capabilities. Despite what some companies promise, credit repair cannot instantly remove accurate, verifiable, timely information from your credit reports. What credit repair can do is systematically challenge questionable items that may be inaccurate, incomplete, unverifiable, or improperly reported under credit reporting standards.

The FCRA requires credit bureaus to conduct reasonable investigations of disputed items. If information cannot be verified within 30 days, it must be removed. If account information was reported in violation of Metro 2 standards, CROA compliance requirements, or other regulatory guidelines, consumers have grounds to challenge that reporting. If debts have passed applicable statutes of limitations or reporting timeframes, they should not appear on credit reports.

Legitimate credit repair involves carefully analyzing credit reports for violations, errors, and unverifiable claims, then systematically disputing them through proper channels. This process takes time, usually several months, because credit bureaus have 30 days to investigate each round of disputes. Companies that promise instant results or guarantee specific score increases are likely engaging in deceptive practices.

Credit repair also cannot fix poor credit caused by current late payments, high credit utilization, or other ongoing financial behaviors. While we can help address past reporting issues, maintaining good credit requires responsible financial management going forward. That's why Credlocity includes monthly budgeting and financial counseling in all our service plans rather than treating credit repair as a one-time fix.

Consumers should be skeptical of any credit repair company that charges fees before providing services, that guarantees specific outcomes, or that refuses to explain exactly what work they'll perform on your behalf. Under the CROA, you have the right to a written contract explaining all services to be performed, the timeline for results, the total cost, and your right to cancel. Any company that won't provide this documentation is violating federal law.

How to Identify and Report Credit Repair Scams

Given the controversy around TransUnion's new technology, it's worth understanding how to identify actual credit repair fraud versus legitimate consumer advocacy. The FTC and state attorneys general have identified several red flags that indicate a credit repair scam.

First, any company that demands payment before providing services is violating the CROA, which prohibits advance fees in credit repair. Legitimate companies charge only after services are rendered. Second, companies that tell you to dispute accurate information or create a new credit identity using a CPN (credit privacy number) instead of your Social Security number are promoting illegal activity that can result in federal charges for identity fraud.

Third, be wary of companies that instruct you to stop communicating with credit bureaus or creditors. You have the right to interact directly with these entities, and any company telling you otherwise is trying to prevent you from discovering they're not actually performing meaningful work on your behalf. Fourth, promises to remove bankruptcies, foreclosures, or accurate judgments from your credit reports are false. These items can only be removed if they're reported inaccurately or have exceeded legal reporting periods.

If you encounter any of these practices, you should immediately report the company to the Federal Trade Commission at https://reportfraud.ftc.gov/. The FTC takes credit repair fraud seriously and has shut down numerous scam operations. State attorneys general also investigate credit repair violations and can take enforcement action against companies operating in their jurisdictions.

Before hiring any credit repair company, research their track record. Check their rating and complaint history with the Better Business Bureau. Search for their name combined with words like scam, lawsuit, or fraud to see if others have reported problems. Ask for references from past clients and actually contact those references to verify their experiences.

Remember that you can dispute credit report errors yourself for free without hiring any company. The reason to work with a credit repair service should be their expertise in credit reporting standards, their understanding of FCRA compliance, and their ability to develop comprehensive strategies, not because the process itself requires paying someone. If a company cannot explain their value beyond simply filing disputes you could file yourself, they're probably not worth hiring.

FAQ: Understanding Credit Washing and Consumer Rights

What exactly is credit washing?

Credit washing refers to the practice of removing accurate, verifiable debt information from credit reports through various means, including filing disputes on items that are correctly reported, exploiting temporary suppression during investigation periods, or misusing identity theft protections. TransUnion distinguishes this from legitimate disputes of inaccurate information, though the line between the two can sometimes be unclear in practice.

Is it illegal to dispute items on my credit report?

Absolutely not. You have the explicit right under the Fair Credit Reporting Act to dispute any information you believe is inaccurate, incomplete, or unverifiable. Disputing credit report errors is not only legal but is a fundamental consumer protection. What's potentially problematic is knowingly disputing accurate information with no good faith belief that it's incorrect, purely to temporarily boost credit scores.

How does TransUnion's Credit Washing Solution affect my credit applications?

TransUnion's system creates risk scores and attributes based on patterns of suppression in your credit history. Lenders who purchase these add-on products can use this information when evaluating your credit applications. Even if disputed items no longer appear on your standard credit report, the pattern of those disputes may be flagged as indicating higher risk, potentially resulting in loan denials, higher interest rates, or additional scrutiny.

Can I see my credit washing risk score?

Currently, these scores are provided to lenders as add-on products to standard credit reports, and there's no clear mechanism for consumers to view or challenge the algorithmic judgments being made about their dispute patterns. This lack of transparency is one of the major concerns consumer advocates have about the system.

What should I do if I was a victim of identity theft?

Exercise your rights under FCRA Section 605B to place identity theft blocks on fraudulent accounts. File an Identity Theft Report with the FTC at IdentityTheft.gov, document everything thoroughly, and work with credit bureaus to ensure fraudulent accounts are properly marked and removed. Don't let fear of algorithmic flags prevent you from addressing identity theft. Your rights as a fraud victim are explicitly protected by federal law.

How can I tell if my disputes are legitimate or if I'm engaging in credit washing?

Ask yourself whether you have a good faith belief that the information is inaccurate, unverifiable, incomplete, or improperly reported. If you're disputing because you genuinely believe there's an error, that's legitimate. If you're disputing accurate information purely to manipulate your credit score, that crosses into problematic territory. Working with an ethical credit repair professional can help you make these distinctions.

What happens if credit bureaus claim my disputes are frivolous?

Credit bureaus can refuse to investigate disputes they deem frivolous or irrelevant. However, they must have a legitimate basis for this determination. If your disputes are substantive, supported by evidence, and based on reasonable claims of inaccuracy or unverifiability, bureaus cannot simply dismiss them as frivolous. If you believe a bureau is improperly refusing to investigate, you may have grounds for an FCRA violation claim.

Should I stop disputing credit report errors because of credit washing concerns?

No. Your FCRA rights remain intact regardless of how credit bureaus choose to track dispute patterns. Continue exercising your rights to challenge inaccurate, incomplete, or unverifiable information. The solution to algorithmic overreach is better regulation and transparency, not consumers surrendering their fundamental rights out of fear.

How do I contact my representatives about FCRA reform?

Visit USA.gov/elected-officials to find your senators and representative. Call their offices and ask to speak with the staff member who handles consumer protection and financial services issues. Explain your concerns about credit bureaus using AI to track dispute patterns and request that they support legislation to strengthen FCRA protections in the age of machine learning credit scoring.

What's the difference between ethical credit repair and credit washing?

Ethical credit repair involves carefully analyzing credit reports for genuine errors, unverifiable claims, and reporting violations, then challenging those items through proper procedures. Credit washing involves disputing accurate information simply to game the system. The key distinction is whether there's a good faith basis for believing the information is incorrect versus knowingly challenging accurate reporting for score manipulation.

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Important Legal Disclosures

The information provided in this article is for educational purposes only and should not be construed as legal or financial advice. Credlocity Business Group LLC operates strictly within the confines of the Credit Repair Organizations Act (CROA) and the Federal Trade Commission's Telemarketing Sales Rule (TSR). We are not attorneys and do not provide legal services.

Under the TSR, credit repair companies that sell services over the phone must wait six months before legally charging consumers. This is why Credlocity does not accept client enrollments over the phone and only processes enrollment through our online platform. This compliance measure protects consumers from predatory companies that charge immediate fees after phone consultations and then fail to deliver meaningful services.

All consumers are encouraged to report any credit repair company that charges for services immediately after a phone consultation to the Federal Trade Commission at https://reportfraud.ftc.gov/. Such practices violate federal consumer protection law and may indicate a scam operation.

Credlocity provides credit repair services based on our analysis of credit reports for inaccuracies, unverifiable information, and reporting violations. We cannot guarantee specific results or score increases, as outcomes depend on many factors including the accuracy of existing reporting, creditor responses to disputes, and individual credit profiles. Any credit repair company that promises guaranteed results or specific score improvements is making claims that violate CROA regulations.

For more information about credit repair laws and regulations, please visit:

• Credit Repair Organizations Act (CROA) Guide

• Credit Repair TSR Compliance Guide 2026

• Credit Repair Scams Warning Guide

• Credit Repair Laws

Sources and References

1. TransUnion. "TransUnion Responds to Growing Challenge of Credit Washing with Pioneering Fraud Detection Solution." Press Release, November 13, 2025. https://newsroom.transunion.com/credit-washing-solution/

2. TransUnion. "What is Credit Washing?" Consumer Information. https://www.transunion.com/faq/what-is-credit-washing

3. Federal Trade Commission. "Fair Credit Reporting Act." https://www.ftc.gov/legal-library/browse/statutes/fair-credit-reporting-act

4. Consumer Financial Protection Bureau. "A Summary of Your Rights Under the Fair Credit Reporting Act." https://files.consumerfinance.gov/f/documents/bcfp_consumer-rights-summary_2018-09.pdf

5. Scotsman Guide. "TransUnion Reports Steep Rise in Credit Washing." November 2025. https://www.scotsmanguide.com/news/transunion-reports-steep-rise-in-credit-washing/

6. National Mortgage News. "Credit Washing Up 668%, TransUnion Warns." November 13, 2025. https://www.nationalmortgagenews.com/news/credit-washing-up-668-transunion-warns

7. Fair Credit Reporting Act, 15 U.S.C. §§ 1681 et seq.

8. Credit Repair Organizations Act, 15 U.S.C. §§ 1679 et seq.

9. Telemarketing Sales Rule, 16 CFR Part 310

About Credlocity: Established in 2008, Credlocity Business Group LLC is a Philadelphia-based credit repair company specializing in ethical, compliant credit restoration services. As a Hispanic-owned, minority-owned, women-owned, and LGBTQAI+-owned business, we've served over 79,000 clients nationwide and successfully removed $3.8 million in unverified debt from consumer credit reports. Our founder, Joeziel Vazquez, holds professional certifications including Board Certified Credit Consultant (BCCC), Certified Credit Score Consultant (CCSC), Certified Credit Repair Specialist (CCRS), and FCRA Certified Professional. We offer a 30-day free trial, 180-day money-back guarantee, and monthly one-on-one consultations to ensure clients receive personalized attention throughout their credit repair journey. Learn more about our services at Credlocity.com or read more about our commitment to ethical credit repair practices.