WASHINGTON, D.C. – At today’s subcommittee hearing to examine our nation’s credit reporting system, Congresswoman Maxine Waters, Ranking Member of the Financial Services Committee, commented on the release of her proposal to comprehensively reform our nation’s consumer reporting system.
She gave the following statement:
“Chair Capito, I’d like to thank you and Chairman Hensarling for granting my request for this important hearing.
Our nation’s credit reporting system impacts almost all Americans and their families. No longer are credit reports used exclusively by lenders in making credit decisions. Increasingly they are used to determine whether a consumer is qualified to get a job, rent a home, buy a car, or obtain auto or homeowners’ insurance.
But despite their growing significance, credit reports continue to contain inaccurate information. Some estimate serious errors affect up to 25 percent of reports. The Federal Trade Commission estimates one in five, or roughly 40 million consumers, have had an error on one of their credit reports – with 10 million facing increased costs as a result.
Sadly, the burden is too often placed on the consumers to prove information on their reports is false, rather than on the consumer reporting agencies and furnishers.
Errors on credit reports are very difficult for consumers to dispute – and it’s even harder to have these inaccuracies actually removed from reports, causing heartache and pain for millions across the country.
It’s time change that paradigm – and ensure that a bad credit score will no longer haunt a consumer for years on end.
That’s why this morning, I released a draft proposal that makes comprehensive, and long overdue reforms that will protect consumers and bring much needed accountability to the credit reporting system.
My proposal will provide relief to millions of borrowers who were victimized by predatory mortgage lenders and servicers by removing adverse information about residential loans that are found to be unfair, deceptive, abusive, fraudulent or illegal.
It stops punishing consumers who pay off their debts, by removing paid or settled debt from credit reports.
It ends the unreasonably long time periods that most adverse information can remain on credit reports, by shortening such periods by three years.
It provides credit rehabilitation to distressed private education loan borrowers by giving them a chance to repair their credit.
And it gives consumers the tools to truly verify the accuracy and completeness of their credit reports, by requiring furnishers to maintain records for as long as the information remains on a person’s credit report.
Finally, the draft proposal also restricts the use of credit reports for employment purposes.
My proposal attempts to meet our obligation to ensure that consumers who have fallen victim – or fallen on hard times – are not deprived of the chance to achieve the American Dream. I look forward to hearing feedback from my colleagues and advocates on this measure.
Thank you, I yield back.”
The hearing was held scheduled as a result of a May request by Waters to examine the adverse impact of medical debt on a consumer’s creditworthiness. Waters’ draft proposal, entitled the “Fair Credit Reporting Improvement Act of 2014,” would ensure those who were victimized by predatory mortgage lenders and servicers are no longer penalized on their credit reports, shorten the amount of time adverse information stays on a credit report, require creditors and lenders to maintain better records of what they report, and eliminate fully paid or settled debt from credit reports, in addition to many other protections.
Text of the draft proposal can be found here. A summary of the draft proposal can be found here.