HR 3621 - Comprehensive Credit Reporting Enhancement, Disclosure, Innovation and Transparency (CREDIT) Act
HR 3621 - Comprehensive Credit Reporting Enhancement, Disclosure, Innovation and Transparency (CREDIT) Act
This bill takes numerous actions to modify the nation's credit reporting system in order to increase transparency and accuracy with respect to the information included on an individual's credit report, and to provide individuals with greater consumer protections and information.
Among its provisions, the measure reduces the amount of time that adverse information may remain on an individual's credit report and expedites the removal of information on debts that have been fully paid off, while preventing certain student loan and medical debts from being included. It establishes new protections for consumers who have been the victim of fraud or abuse, such as predatory lending, and updates the process used by credit bureaus for resolving disputes over adverse information included on a credit report. It also requires credit bureaus to annually provide consumers with their credit score for free, if requested, along with information on how their credit score was calculated.
The measure transfers a number of consumer protection functions established under the Fair Credit Reporting Act from the Federal Trade Commission (FTC) to the Consumer Financial Protection Bureau (CFPB), and it authorizes the CFPB to issue new regulations to implement the bill's provisions. It automatically voids any existing contracts that are in violation of the Fair Credit Reporting Act as modified by this measure. Most of the bill's provisions would take effect two years after enactment.
Finally, to ensure that companies are in compliance with the Fair Credit Reporting Act, the bill authorizes federal courts to grant injunctive relief against companies that are either willfully or negligently noncompliant with the law's provisions — which could require a company to cease a particular practice. Courts could award attorneys fees and other court fees to consumers who file civil lawsuits against violators of the law's provisions.
Supporters
Supporters of the bill, primarily Democrats, argue that overhauling the nation's credit reporting system is needed to ensure that American consumers are not being unfairly denied access to loans and other credit. They say the measure will help improve the accuracy of consumers' reported credit information and provide consumers with more ways to dispute and correct inaccurate information. In particular, those changes will significantly reduce the amount of time adverse information continues to affect individuals whose debt has been paid off.
The bill will also extend existing consumer protections to cover individuals who have been the victims of predatory lending or fraud, thereby ensuring that those individuals do not face additional obstacles to obtaining credit in the future. And it will significantly increase the transparency of the credit report and credit score process for consumers, they say, making it easier for individuals to understand the process and make informed financial decisions and prevent fraud. Finally, they argue that it will prevent a consumer's credit history from affecting their prospects for employment.
Opponents
Opponents of the bill, primarily Republicans, express concern about the overall impact it would have on the credit system, saying it fails to address underlying issues and will ultimately make it more difficult to access credit. They argue that some changes are needed to the nation's credit reporting framework, but say the bill's changes could limit the amount of predictive information contained in credit reports — which could ultimately increase the cost of credit and lead to more defaults, adversely impacting consumers across the U.S. financial system.
It also contains contradictory directives, seeking to ensure credit report information is complete and accurate while simultaneously limiting the information credit bureaus and lenders can use to make financial predictions. It broadly expands the scope of the CFPB to issue regulations, which they say could impose undue burdens on the financial services sector. And instead of requiring helpful disclosures to increase transparency for consumers, they say it micromanages the data used by private companies without achieving the goal of making consumer credit information more accurate.
