The Dirt on Credit Washing

Credit washing activity is on the rise and distorting the credit landscape — exposing financial institutions (FIs) to previously unrecognized portfolio risk. A recent analysis by TransUnion^® reveals how suppression tactics — initiated by both consumers and FIs, albeit for very different reasons — are erasing billions in charge-off losses from credit reports, masking high-risk behavior and undermining traditional risk models.

What’s happening:

• Consumer-initiated suppressions (where consumers dispute valid tradelines under claims of identity theft or fraud) have jumped 272% in the past year — and human trafficking suppressions have grown 9,000% year over year
• Lenders are increasingly suppressing charge-offs: 10 million charged-off accounts were suppressed in the first half of 2025 — nearly three times more than four years ago
• Both tactics result in artificially clean credit profiles that misrepresent borrower risk

Why it matters:

• Suppressed charge-offs lead to 26% of early default rates compared to just 6% for clean profiles
• Consumers with suppressed charge-offs are 3.5x more likely to default within a year of opening an account
• Portfolio losses are widespread, with average early charge-off losses reaching $22,000 for auto loans and $11,000 for retail cards

Inside the brief:

• Analysis of suppression trends and fraud segmentation
• Impact across credit tiers and product lines
• Introduction to TransUnion Credit Washing Solution, an innovative product suite that detects and quantifies suppression-driven risk

Learn more about this hidden threat to credit risk integrity and how to protect your portfolio. Complete the form to access the brief.