Another Try at Credit Bureau Regulation
What happens when you discover false information on your credit report? Whether you're dealing with the aftereffects of identity theft and fraudulent accounts or a simple clerical error, prepare for a long and unpleasant battle. Even simple errors can be hard to fix, and consequences can be severe.
According to a recent report by the National Consumer Law Center (NCLC), approximately 42 million Americans have errors in their credit report – and, for almost one-quarter of those Americans, those mistakes result in being denied credit or paying more for the privilege.
After the 2017 Equifax data breach that exposed the personal information of nearly 150 million consumers, Representative Maxine Waters (D-CA) introduced the Comprehensive Consumer Credit Reporting Reform Act (CCCRRA) to hold credit reporting agencies (CRAs) more accountable and give consumers more control over their credit reports. With Republican control of all branches of government, the bill went nowhere – but Rep. Waters is trying again in 2019 with a more receptive Democratic House of Representatives.
Changing the Incentive
You can correct erroneous information on your credit report, but it's not easy.
According to the Federal Trade Commission (FTC), you must file a dispute letter with each of the CRAs, including supporting documents. The CRAs typically have thirty days to investigate the claim and then notify you of the results in writing. If you disagree with the result, you can have a dispute statement included in your file for future creditors to read – and, if the issue is serious enough, hire a lawyer and seek legal remedies.
The CCCRRA text cites a 2015 FTC follow-up survey of consumers who filed disputes with the CRAs. Almost 70% of those consumers said that their credit reports still contained at least some inaccurate information. Even worse, half of those consumers planned to give up on correcting their information.
The CCCRRA addresses the problem from both sides – holding credit reporting agencies more accountable for erroneous information and giving consumers better tools to remove it. Since lenders are their customer bases, credit reporting agencies have more incentive to protect lenders from bad loans than to protect consumers from bad information. CCCRRA plans to shift the incentive toward consumers.
Improving Your Options
As currently constructed, the bill addresses the dispute process both proactively and reactively.
CCCRRA would create a new consumer right to appeal an initial review as long as the appeal was submitted within 120 days of the notice of the results, also requiring CRAs and data providers to supply sufficient staff toward this process. The bill would eliminate data furnishers' "authority to dismiss disputes as frivolous or irrelevant" and force CRAs to provide dedicated webpages to clarify the dispute resolution process.
To reduce the need for disputes, CCCRRA would require consumer notification of negative credit report information at least ninety days before it's reported to the CRAs. With advance notice, you could address incorrect information with the lender/creditor before it ever reaches the CRAs.
To provide regulatory incentive for greater accuracy, the Consumer Financial Protection Bureau (CFPB) would be charged with developing accuracy guidelines and record retention rules for CRAs. The effect trickles down to lenders/creditors, as those who continually provide incomplete or incorrect information could be temporarily banned from reporting information.
Other provisions address restoring credit to damaged profiles. One section reduces the time adverse information remains on credit reports to seven years for bankruptcies and four years for most other events. Another section mandates expedited removal of paid/settled debt from credit reports.
Representative Waters has a good chance of getting CCCRRA through the House of Representatives, but Senate Republicans are unlikely to pass the bill without significant amendments. There's still hope for a bipartisan compromise. Let's hope any final version protects consumers more than lenders.
Even with a Democratic-controlled House of Representatives, major credit reporting reform is unlikely to be enacted anytime soon. Don't let that stop you from using the oversight powers that you already have.
Check your credit report from each of the three major credit reporting agencies (Equifax, Experian, and TransUnion) on a regular basis. "All kinds of mistakes can be made on something as important as your credit report and if you find any mistakes you want to contest them immediately," advises Steven Millstein, a credit repair consultant at CreditRepairExpert.org. Make sure that all your listed personal and account information is correct, and that there are no duplicate or false accounts that are signs of identity theft. Let MoneyTips protect your credit and your identity with a free trial.
Consider applying a credit freeze on your accounts, now that they're free to apply and remove. Freezes prevent identity thieves from opening false accounts in your name if they do get your information – and once they appear on your report, fraudulent accounts and any associated delinquent bills can be challenging to remove.
At the same time, regularly review all of your existing account information. Identity thieves could abuse your existing accounts, giving the appearance that you're using too much of your existing credit and dropping your credit score.
If you agree that more credit reporting oversight from the government would be useful, let your Congressional representatives know – but don't hold your breath waiting for a bill to pass. Instead, do your best to protect your identity and raise your credit score.
You can check your credit score and read your credit report for free within minutes by joining MoneyTips.