Congressman Henry Cuellar (TX-28) announced in a Thursday news release he is working to enhance consumers’ credit reporting rights by voting for H.R. 3621, the Comprehensive Credit Rating Enhancement, Disclosure, Innovation, and Transparency (CREDIT) Act.
The new piece of legislation will work to create transparency over the reporting and credit scoring process, limit negative reporting of private student loan debt, and increase accountability of reporting agencies and the creditors and lenders who provide them information, according to the release.
“While credit scores are instrumental to our financial futures, the reporting system is often erroneous, malicious towards consumers, and confusing to navigate. A small error on a credit report can damage a person’s ability to gain employment and access credit. Unfortunately, credit reporting companies have little to no incentive to fix them” Cuellar stated in the release. “This legislation will reform the credit reporting system by requiring reporting companies to fix errors and reduce penalties incurred as a result of fraudulent debt.”
The CREDIT Act of 2020 will:
- Prohibit the use of credit reports in current or prospective employment decisions, unless the credit report is required by local, state, or Federal law or for national security reasons.
- Direct the nationwide and specialized Credit Reporting Agencies (CRAs) to distribute free copies of consumer’s credit scores that are used by creditors to make credit decisions or educational credit scores wherever consumers receive their free annual consumer reports. It also promotes transparency by requiring consumer-friendly information on how the score was calculated and positive and negative examples that impacted their score.
- Remove damaging credit information related to defaulted or delinquent private education loans for consumers who demonstrate a history of timely loan repayments.
- Shorten the time period that most negative credit information stays on a consumer’s form from 7 years to 4 years, and from 10 years to 7 years for bankruptcy information. It also requires that negative information be removed when found to be a result of fraudulent debt, identify theft, or a malicious act by a financial institution.
- Establish federal oversight of credit scoring models by directing the Consumer Bureau to set standards of validating the accuracy and predictive value of credit scoring models.
- Work to rectify hurdles consumers experience when removing errors from their consumer reports. It also requires all lendors or creditors who report negative information to CRAs to alert consumers about this practice and when they first send derogatory information.
- Require CRAs to offer credit monitoring and identity theft protection to consumers at a reasonable fee and offer the same services to victims of identity theft or fraud, military members, those who are unemployed, seniors, or National Guard members.