Rep. Maxine Waters (D-CA), the ranking member of the House Financial Services Committee, is putting forward proposed legislation designed to change the nature of credit reporting. Under Rep. Waters’ draft proposal, the “Fair Credit Reporting Improvement Act of 2014,” credit reporting agencies will be required to remove “adverse information about these residential loans that are found to be unfair, deceptive, abusive, fraudulent or illegal,” according to a statement issued by Waters’ office. Furthermore, credit reporting agencies will be required to reduce the length that adverse information remains on a consumer’s credit report by three years and will, according to Rep. Waters’ office, remove “fully paid or settled debt from credit reports, including medical debt, which has been found not to be a reliable predictor of a person’s creditworthiness.”
“Credit reports are no longer just used exclusively by lenders in making a credit decision,” said Rep. Waters, who is planning to discuss her proposal today in House Financial Services Committee hearing, “An Overview of the Credit Reporting System.”
“More and more, credit reports are used in a variety of ways, from employment decisions, to determining a consumer’s ability to rent a home, buy a car, or purchase insurance,” Rep. Waters added. “A person’s credit report is too important in determining access to a wide array of opportunities for these reports to contain inaccurate and incomplete information. This proposal addresses many of the flaws with the existing consumer reporting system, by making common-sense changes that enhance consumers’ rights, create more transparency over the consumer reporting and credit scoring process, and increase the accountability of credit reporting agencies, furnishers, and companies that develop credit scoring models and formulas.”
The draft proposal also restricts the use of credit reports for employment purposes and sets a dollar amount that a consumer can be charged to buy their credit score from a credit reporting agency. These agencies will also be required to provide consumers with a free annual credit or educational credit score upon a consumer’s request.
“I believe we must take action to end the heartache that has plagued millions of consumers who have been unable to obtain a job, go to college, or buy a car because of their credit score,” Rep. Waters added. “Many of these problems have stemmed our country’s economic growth. This draft proposal attempts to meet our obligation to ensure that consumers who have fallen victim–or have fallen on hard times–are not deprived of the chance to achieve the American Dream.”