Amazing when you think of all the issues that can impact your credit rating, misinformation tops the list with 77% of those complaints involving incorrect information on consumers’ credit reports. Obviously this can create a lot of problems in your life but when it comes to purchasing a home, a bad credit rating (no matter who is at fault) is a real deathblow.
A proposed overhaul to the credit reporting system, spearheaded by Representative Maxine Waters (CA), a ranking member of the U.S. House Committee on Financial Services, unveiled soon-to-be introduced legislation recently that would make significant reforms aimed at bringing the “broken system” into the 21st century.
An article on Consumerist explains that the measure, entitled the “Comprehensive Consumer Credit Reporting Reform Act,” aims to augment requirements on the consumer reporting agencies (CRAs), and furnishers that provide information to these CRAs, to ensure consumers aren’t unfairly penalized for incorrect information or outdated debt that may appear on their reports.
End to misleading practices
According to an article on Housing Wire, the bill – among other things – calls for an end to the credit reporting agencies’ “misleading” practice of automatically converting free trial periods for many consumer reporting products and services into paid, monthly subscription services, by requiring the credit reporting agencies to provide “explicit opt-ins” at the end of trial promotions.
But that’s only the tip of the iceberg as the hoped-to-passed –reform, according to the Consumerist, includes the follow provisions:
Bad Mortgages: Providing relief to millions of borrowers who were victimized by predatory mortgage lenders and servicers, by removing adverse information about these residential loans that are found to be unfair, deceptive, abusive, fraudulent or illegal.
Disputes: Establish clear standards for credit agencies and furnishers to improve the accuracy of reporting.
For the first time, consumers would have the right to appeal initial reviews of disputed items that are conducted by either credit bureaus or furnishers.
It also would require furnishers, who regularly provide information about their customers to credit bureaus, to inform their customers of this practice and to let them know the first time that they actually report negative information about a specific customer.
It also would require credit reporting agencies to establish dedicated “dispute” pages on their websites that are free of aggressive marketing of products and services.
Decreasing Time On A Report: Ending the unreasonably long time periods that most adverse information can remain on a person’s credit report, shortening such periods by three years.
Student Loans: Giving distressed private education loan borrowers the same chance to repair their credit as federal student loan borrowers, by removing adverse information when delinquent private education loan borrowers make consecutive on-time monthly payments for a certain period of time on their loans.
Medical Debt: The reform would restrict how medical debt appears on credit reports by removing paid and federal medical reports within 40 days. Consumers would also be given a 180 day grace period before medical debt can be put on a report.
A bill whose time has come
The bill will bring much-needed accountability to the credit reporting industry, which will enhance consumer and creditor confidence in the integrity of information on reports and restore fairness in the system.