On Monday, the U.S. House approved H.R. 5332, the Protecting Your Credit Score Act of 2020 (Gottheimer-NJ). U.S. PIRG joined other leading advocates of credit reporting reform in a letter to the House last week supporting the bill. As we said in that letter:
"The Federal Trade Commission’s definitive study showed that 21% of consumers had verified errors in their credit reports, 13% had errors that affected their credit scores, and 5% had errors serious enough to cause them to be denied or pay more for credit. Trying to fix these errors can be a Kafka-esque nightmare in which the Big Three nationwide consumer reporting agencies (CRAs) –Equifax, Experian and TransUnion - consistently favor the side of the creditor or debt collector (“the furnisher”) over the consumer."
The bill takes a number of steps to make it easier to fix credit reporting errors. In January, we applauded the House for passing the Comprehensive CREDIT (Credit Reporting Enhancement, Disclosure, Innovation, and Transparency) Act of 2020 (HR3621 (Pressley-MA)). The Gottheimer bill, as we noted last July, is a companion to the Comprehensive CREDIT Act. Were the Senate to pass the two bills, consumers would have a number of new tools to protect themselves against the Big Three credit bureaus.
Our analyses repeatedly show that complaints about Equifax, Trans Union and Experian, the Big Three credit bureaus, lead complaints by all firms to the CFPB. In 2019, in that order, they were 1, 2 and 3 on the CFPB's complaint database in total complaints. Also, half of all complaints to the CFPB in 2019 were about these and other credit reporting firms. Throughout the pandemic, the percentage of complaints against credit reporting companies has only increased.
It's clear that consumers are angry at credit reporting companies. The Protecting Your Credit Score Act takes a number of steps to make it easier to force the credit bureaus to re-investigate mistakes and fix your problems. Among its highlights:
- It Establishes an Online Consumer Portal Landing Page: It mandates that all CRAs create a single online consumer portal that gives consumers free and unlimited access to their consumer reports and credit scores.
- It Increases Credit Report Accuracy and Transparency: It requires the Big 3 CRAs to conduct preventative audits by matching all digits of a social security number or the full legal name, date of birth, current address, and one previous address to the correct consumer to increase consumer report accuracy. The credit bureaus are notorious for matching only 7 of 9 digits of a consumer's SSN, often resulting in severe "mixed-file" problems requiring years of complaints after numerous credit denials.
- It also establishes a CFPB ombudsperson to resolve common errors made by CRAs. The ombudsman would work for you!
In my testimony last year in support of the draft package from House Financial Services committee chair Maxine Waters (CA) that became both the Comprehensive CREDIT Act and the Protecting Your Credit Score Act, I said the following:
"I first testified before this committee on credit reporting mistakes in 1989, at a time when several states and the Federal Trade Commission (FTC) were conducting investigations and negotiating consent decrees with several large consumer reporting agencies due to a troubling pattern of consumer complaints over both their mistakes and their recalcitrance and failure to correct the mistakes after consumers exercised FCRA-mandated dispute rights. That 1989 hearing was the first real effort by Congress to rein in the credit bureaus since passage of the original act in 1970. Since then, Congress has continually conducted oversight and, in response to industry’s indifference to the problems it causes for consumers seeking financial or employment opportunity, has enacted significant reforms in 1996, 2003 and 2010."
Now, in 2020, ten years after the last significant reform (creating the CFPB), the credit bureaus have grown into even more powerful gatekeepers to financial and employment success. Yet, consumers are facing new family finance challenges as the pandemic ravages their jobs and incomes. It's a critical time for consumers to have better opportunities and these credit reporting reforms will make a difference.
Photo by CafeCredit, used under Creative Commons license.