Federal Government Considers Overhauling Credit Scores, Reporting

A new congressional bill introduced by Representative Maxine Waters, D-CA, proposes to drastically change the way consumer credit data is used, reported and recorded by American credit reporting agencies. Known as the “Comprehensive Consumer Credit Reporting Reform Act of 2016,” the proposed legislation has been in the works since 2014.

“American consumers are increasingly reliant on credit information that is used to determine their ability to buy a house, open a checking account, or even get a job,” Waters said. “I believe it is time to shine light into the mysterious ‘black boxes’ that generate credit scores and give victims, who are saddled with poor credit because of predatory and unfair practices, the chance for a fresh start.”

Waters’ office says the bill would decrease the length of time most adverse credit information stays on a consumer’s credit report to only four years, and require immediate removal of any debts paid in full within 45 days. The bill also gives watchdog agency the Consumer Financial Protection Bureau a directive to monitor the development of a new credit reporting model.

The legislation would also offer assistance to anyone “victimized by unfair, deceptive or abusive acts or practices” of mortgage lenders or servicers by allowing them to have negative mortgage loan information removed from their reports for good.

The legislation is supported by a host of consumer groups, including Americans for Financial Reform, National Consumer Law Center, AFL-CIO, Center for Digital Democracy, Consumer Action, Consumer Federation of America, Consumers Union, National Association of Consumer Advocates and National Urban League.

It remains unclear when Congress will hear testimony on the bill.

Image via Flickr/cafecredit.com