The House Financial Services Committee held a hearing earlier this week entitled, “A Biased, Broken System: Examining Proposals to Overhaul Credit Reporting to Achieve Equity,” which examined the following three legislative proposals:

• National Credit Reporting Agency Act: Creates a government-run credit reporting bureau administered by the CFPB to produce a government credit score for consumers.
• Protecting Your Credit Score Act: Requires the credit reporting agencies to create a single online consumer portal web page that gives consumers access to free credit reports and credit scores, dispute errors, and place or lift security freezes. (This legislation passed the House last year.
• Comprehensive Consumer Credit Reporting Reform Act: Makes a bevy of changes to the credit reporting system, including giving the CFPB authority to regulate credit score models and the ability to prohibit the use of certain criteria when determining credit scores for consumers. (This legislation also passed the House of Representatives last year.)

AFSA has several concerns with the proposed legislation. We continue to emphasize that access to affordable credit is essential for everyday American life. To ensure consumers have access to credit, creditors must rely on accurate and predictive consumer reports and scores to appropriately underwrite loans. With less accurate consumer reports and scores, creditors would have to consider reducing the amount of credit extended or raise prices to cover the additional risk.

According to the CFPB, 45 million Americans may be denied access to credit because they do not have credit records that can be scored. Congress should be looking to expand access to credit for individuals of all economic backgrounds, as opposed to spending valuable resources creating a duplicative credit reporting system. AFSA also encourages policymakers to address the increasing number of duplicative or frivolous Fair Credit Reporting Act (FCRA) disputes and litigation. Wasteful and abusive credit disputes divert creditor attention and resources from legitimate disputes.

As legislation moves through the House of Representatives, AFSA will keep our members informed on the latest developments.  While the House was able to pass legislation expanding CFPB’s regulatory oversight of the credit reporting system last Congress, AFSA does not anticipate that the Senate will advance any measures creating a government-run style credit bureau at this time, including other comprehensive credit reporting changes.