AFSA President and CEO Celia Winslow is pleased to testify tomorrow before the House Financial Services Committee’s Subcommittee on Financial Institutions on promoting access to credit for American consumers.  You can read her full testimony here.

The credit-reporting system is the infrastructure that allows consumers to buy cars, finance homes, and manage the financial setbacks life inevitably brings. Most people don’t think much about their credit report until a problem appears, and today, fraudsters are deliberately exploiting that blind spot.

Scam platforms promise to “repair” credit scores through mass-submitted fake disputes and fabricated identity-theft claims. Predatory debt-settlement firms extract fees from vulnerable consumers while leaving them worse off. And as artificial intelligence makes these schemes faster and more scalable, the damage they do to the credit-reporting system, and to the honest borrowers who depend on it, is growing.

In her testimony, Celia identifies four core threats to the integrity of the credit-reporting system.

Credit washing is contributing substantially to the $10.2 billion in fraud losses hitting the vehicle finance industry. Social media scammers and certain credit repair organizations flood lenders, credit bureaus, and the CFPB with identical form-letter disputes, aiming to overwhelm the system until accurate negative information disappears. The consequences extend beyond the fraudster: borrowers with artificially cleared records are three-and-a-half times more likely to default, raising costs and tightening credit for everyone.

False identity-theft claims undermine the individualized underwriting that makes credit markets work. Every fraudulent claim that succeeds forces lenders to become more cautious, which means higher rates and fewer approvals for honest borrowers. An accurate credit record is what allows a lender to see a borrower as an individual, not just a risk category. When that record is corrupted, the borrower who has managed their obligations responsibly loses the competitive advantage their history has earned them.

Predatory debt-settlement companies have expanded their targeting beyond consumers in genuine financial distress to borrowers who are current on their payments. Their typical approach – urging consumers to stop making payments and redirecting funds into a company’s settlement account – can cause serious credit damage while the company collects fees. What is marketed as a path to relief often becomes its own financial crisis.

Artificially inflated credit scores create a different but equally serious problem. When reporting certain debts is prohibited – as in the CFPB’s failed proposal to bar unpaid medical debts from credit reports – credit scores may rise, but actual creditworthiness does not. The same dynamic can emerge with some “credit builder” products that produce scores disconnected from a borrower’s true ability to repay. Lenders acting on inflated scores may approve loans consumers cannot sustain, exposing both parties to harm.

Accurate credit data is not just a lender’s tool – it is a consumer’s asset. It is what allows a responsible borrower to be seen and rewarded for that responsibility. Corrupting that data, whether through fraud, predatory schemes, or well-intentioned but misguided policy, doesn’t level the playing field. It obscures it. AFSA believes Congress has the tools in place to protect both the credit-reporting system and consumers if it chooses to act.