January 27, 2020
The 85 undersigned consumer, civil rights, labor, and community organizations write to express our support for HR 3621, the Comprehensive Credit Reporting Enhancement, Disclosure, Innovation, and Transparency Act of 2020 (Comprehensive CREDIT Act of 2020).
Credit reports and credit scores play a critical role in the economic lives of Americans. They are the gatekeeper for affordable credit, insurance, rental housing, and sometimes unfortunately even a job. Yet they suffer from unacceptable rates of inaccuracy. This bill would enact a sea change that would make the American credit reporting system more accurate and fairer to consumers.
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 report agencies (CRAs) –Equifax, Experian and TransUnion – consistently favor the side of the creditor or debt collector (“the furnisher”) over the consumer.
The American credit reporting systems suffers from a number of other flaws and defects. Consumers are unfairly penalized by negative credit reporting when they have been the victim of abusive practices, such as predatory mortgages or student loans resulting from for-profit school fraud, or due to circumstances out of their control, such as temporary job loss, illness, or financial abuse by a family member. Healthcare bills contribute greatly to credit reporting harms, with over 50% of debt collection items resulting from medical debt.
Consumers also lack the right to a free annual credit score. Furthermore, many consumers who attempt to obtain a free annual credit report or to obtain their scores are misled into purchasing high-priced credit monitoring or other subscription services. These services are also marketed to prevent identify theft, yet they are far less effective in doing so than a security freeze.
This legislation comprehensively addresses all of these abuses, and more. This bill would:
Fix the broken system for credit reporting disputes by (1) giving consumers a new right to appeal the results of initial disputes; (2) requiring CRAs and furnishers of information to dedicate sufficient resources and provide well-trained personnel to handle disputes; (3) requiring CRAs to conduct an independent analysis of disputes, separate from that of the furnisher; and (4) requiring furnishers to retain records for the same time period that negative information remains on reports.
Improve credit reporting accuracy by directing the Consumer Financial Protection Bureau (CFPB) to establish accuracy regulations, including requiring CRAs to better monitor furnishers for high error rates and to use stricter criteria to match information from a lender to a consumer’s file, preventing the worst type of credit reporting error, the “mixed file.”
Restrict the use of credit information for employment by limiting it to two narrow instances — when required by local, state or federal law or for national security clearances. This will severely limit a practice that discriminates against the long-term unemployed, has a disparate impact on communities of color, and has very little evidence demonstrating its effectiveness in predicting job performance.
Help victims of abusive lending and overly punitive negative reporting practices by (1) reducing the current overlong retention periods that adverse credit information remains on reports to four years (seven years for bankruptcies); (2) allowing borrowers victimized by the unfair, deceptive or abusive practices of mortgage lenders or servicers to have adverse mortgage-related information removed; and (3) requiring the removal of negative information about private education loans that were obtained to attend for-profit colleges found to have engaged in unfair or deceptive practices.
Protect consumers from the unfair impact of medical debt by prohibiting CRAs from including medical collections on reports until 365 days from the date of first delinquency and prohibiting the reporting of any debt for medically necessary procedures. This will ensure that consumers have time to resolve their complex, confusing medical bills. The bill also mandates that all paid or settled debt, including medical collections, be removed within 45 days from reports.
Help consumers understand their creditworthiness by giving consumers the right to a free credit score at the same time that they obtain their free annual consumer report. The bill also creates several new instances in which consumers are entitled to receive both free reports and scores, including requiring auto, private education and mortgage lenders to provide prospective loan borrowers the same free reports and scores that the lenders used in their decision-making before consumers sign those loan agreements.
Address misleading marketing of credit monitoring subscriptions and increase access for security freezes to prevent identity theft by (1) prohibiting the misleading practice of automatically converting free trial periods into paid, monthly subscription services by requiring CRAs to provide explicit opt-ins at the end of the promotions and (2) providing free credit freezes for security breach victims and vulnerable consumers, and capping the cost for all other consumers.
Give a second chance to struggling private education loan borrowers by allowing them to rehabilitate impaired credit records through requiring removal of adverse information about delinquent or defaulted loans if they are able to make nine out of ten on-time, monthly payments.
Correct provisions in last year’s deregulatory law, S2155, that unwisely preempted states from further improvements to the credit freeze laws and provided servicemembers with a credit monitoring right without a remedy.
These credit reporting reforms are urgently needed in order to ensure that consumers are treated fairly and that the credit reporting system that underlies so many daily transactions works better for the public.
We look forward to working with you to swiftly pass this bill to better protect consumers.
Americans for Financial Reform
A2Z Real Estate Consultants
African American Health Alliance
Alaska Public Interest Research Group
Arkansas Community Organizations
CAFE Montgomery MD
Center for Digital Democracy
Cleveland Jobs with Justice
Community Action Human Resources Agency (CAHRA)
Congregation of Our Lady of the Good Shepherd, US Provinces
Connecticut Fair Housing Center
Consumer Federation of America
Consumer Federation of California
CWA Local 1081
Delaware Community Reinvestment Action Council, Inc.
Denver Area Labor Federation
East Bay Community Law Center
FAITH IN TEXAS
Florida Alliance for Consumer Protection
Greater Longview United Way
Habitat for Humanity of Camp Co, TX
Hawaiian Community Assets
Housing Action Illinois
Housing and Family Services of Greater New York, Inc.
Mary House, Inc.
Maryland Consumer Rights Coalition
Miami Valley Fair Housing Center, Inc.
Mobilization for Justice Inc.
Montana Organizing Project
Multi-Cultural Real Estate Alliance For Urban Change
National Advocacy Center of the Sisters of the Good Shepherd
National Association of Consumer Advocates
National Association of Social Workers
National Association of Social Workers West Virginia Chapter
National Center for Law and Economic Justice
National Consumer Law Center (on behalf of its low-income clients)
National Consumers League
National Fair Housing Alliance
National Housing Law Project
National Housing Resource Center
National Rural Social Work Caucus
New Economics for Women
New Jersey Citizen Action
New Jersey Tenants Organization
New York Legal Assistance Group
North Carolina Council of Churches
Partners In Community Building, Inc.
Pennsylvania Council of Churches
People Demanding Action
Progressive Leadership Alliance of Nevada
Public Justice Center
Public Law Center
Public Utility Law Project of New York
Rocky Mountain Peace and Justice Center
SC Appleseed Legal Justice Center
Sisters of Mercy South Central Community
Society of St. Vincent de Paul
St. Paul UMC
Tennessee Citizen Action
The Center for Survivor Agency and Justice
The Disaster Law Project
The Greenlining Institute
The Leadership Conference on Civil and Human Rights
THE ONE LESS FOUNDATION
Urban Asset Builders, Inc.
Virginia Citizens Consumer Council
Virginia Poverty Law Center
West Virginia Center on Budget and Policy
WV Citizen Action Group
 Federal Trade Comm’n Report to Congress Under Section 319 of the Fair and Accurate Credit Transactions Act of 2003 (Dec. 2012), available at http://www.ftc.gov/sites/default/files/documents/reports/section-319-fair-and-accurate-credit-transactions-act-2003-fifth-interim-federal-trade-commission/130211factareport.pdf.