The Consumer Financial Protection Bureau (CFPB) announced last week that it intends to improve all areas of the credit reporting process. Since its inception in 2010, the CFPB has received nearly 200,000 complaints related to credit reporting. The agency noted its unique regulatory position in that it supervises all aspects of the credit reporting market from data accuracy to the dispute process.
The CFPB has yet to provide details on the steps it plans to take to correct the inefficiencies and inaccuracies within the credit reporting market. It is unclear how its actions in this area could affect NAFSA members. The short term credit products and services offered by NAFSA members do not typically rely on traditional FICO credit scores. In fact, many short term credit consumers are credit invisible, lacking the sufficient data to develop a credit score. NAFSA members rely on unique algorithms to assess creditworthiness. A former Vice-Chairperson of NAFSA testified last year before the U.S. House of Representatives Financial Services Committee that less than 2% of applicants are ultimately approved for a loan using her tribe’s unique credit algorithm. As previously reported by NAFSA, the CFPB is also considering a rule that would allow alternative sources of data, similar to the types of information used in NAFSA member credit algorithms, to determine credit scores.
