Is there Bipartisan Consensus on Reforming the Credit Reporting System?
At a House Financial Services Committee hearing on Tuesday, February 26, Congresswoman Maxine Waters (D-CA-43), chairwoman of the Committee, openly questioned whether the credit reporting sector “is so beyond repair that we need to completely rebuild the entire consumer credit reporting sector to truly put consumers first.” Congressman Patrick McHenry (R-NC-10), ranking member of the Committee, agreed with Waters, arguing that the credit reporting system was in “need of major repair.”
The hearing entitled, “Who’s Keeping Score? Holding Credit Bureaus Accountable and Repairing a Broken System,” addressed the importance of credit in today’s society and the continued shortcomings in the current credit reporting system.
In her opening statement, Waters brought up the 2017 Equifax data breach, which exposed the personal data of approximately 148 million individuals; the 2015 Experian breach, which affected 15 million people; and the 2013 revelation by all three major consumer credit bureaus that there had been unauthorized access to sensitive consumer data.
Despite these breaches, “Consumers did not choose to entrust these companies with their personal information, and they do not have the option today of choosing a different company to maintain their consumer credit data records or having their information deleted from the major credit bureaus’ databases, even following these egregious breaches,” said Waters.
Representative McHenry agreed with Waters arguing that “system is broken” and would be better served if there were more competition. McHenry also stated that the “dispute resolution process should be more consumer friendly [and] more user friendly.”
On the day before the hearing, Committee Democrats introduced legislation that would reform the credit reporting sector by expanding consumers’ access to free consumer reports, make the dispute resolution process more consumer-friendly, and reduce the period of time that adverse credit information can stay in credit reports from seven to four years.
Several Republicans on the Committee argued against removing the adverse information from a consumer’s credit report as it could lead to unintended consequences. “A deal is a deal in America, and people need to pay their debts,” said Rep. Roger Williams (R-TX-25). “I’m worried about this committee is going to go down a path where lenders are receiving credit reports that have been scrubbed of all negative credit information.”
Representative Bill Huizenga (R-MI-2) argued that scrubbing adverse information from a credit report “could negatively impact a lender’s ability to assess risk, and…it has the risk of increasing the cost of consumers’ access to credit.”
For now, Democrats and Republicans on the Committee do not see eye-to-eye on every issue, but there does seem to be a consensus that the current credit reporting system is broken and in need of major repair.