The Senate Committee on Banking, Housing and Urban Affairs recently met to discuss
“An Overview of the Credit Bureaus and the Fair Credit Reporting Act.”
Both sides discussed their concerns and ideas to help fix the problem.
The two major concerns by the senators was the FTC and CFPB’s inability to fine the Big 3 for reporting mistakes and inaccuracies, and the fact that consumers have no control over their own information, both good and bad.
It was also pointed out that over 10 MILLION AMERICANS HAVE INACCURATE INFORMATION ON THEIR REPORT UP TO TWO YEARS AFTER PROVING OTHERWISE.
ALTERNATIVE DATA USE was also a hot topic. Sen. Tim Scott brought up the point that many consumers don’t have credit scores at all, or are "credit ghosts". Scott said Brookings Institution claims "alternative data could cause a 20% increase in credit visibility for those making less than $20,000 per year, and a 15% increase for those making from $20,000 to $30,000 per year." Others agreed that the use of alternative data could be a solution for thin credit files and that the CFPB is currently monitoring alternative data options and how it could help expand access to credit.
Other potential solutions to fix the broken credit reporting system were also brought up-
THE POWER TO DECIDE - Sen. Robert Menendez reminded the group that credit bureaus can sell consumers’ personal data without ever getting their consent. He suggested that consumers should be given the power to decide when and with whom their data can be shared.
THE USE OF TECHNOLOGY - Sen. John Kennedy added “We should be smart enough to come up with technology to fix the broken system."
FINES AND PENALTIES - Sen. Mark Warner argued that the regulators’ authority to act is limited, and therefore does not motivate credit reporting agencies to act in the consumer’s best interest.The CFPB currently has some authority to oversee credit bureaus, it does not have authority to seek civil penalties.
MEDICAL / JUNK DEBT - Sen. Sherrod Brown, D-Ohio, suggested pausing medical debt reporting until there is a more affordable health care option.
An opt-in credit system to give consumers more power over their information was also brought up, but it was pointed out that an opt-in system would do more harm than good when it comes to granting access to ones credit.
In closing, something must be done. There are recent reports suggesting inaccuracies on as many as 40 million consumer credit reports, up to 7 years old. In recent years, Trans Union bought the largest credit repair company in business. This in itself seems unethical to say the least. So Trans Union, you mean I can actually pay your other company to remove the inaccuracies you are reporting? That makes sense, seems like we should start there. At any rate, something must be done, and I suspect it will be in the near future.
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