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NAFCU warns of unintended consequences of credit reporting changes
NAFCU Vice President of Legislative Affairs Brad Thaler yesterday sent a letter to House leadership to share the association's concerns with the Protecting Your Credit Score Act (H.R. 5332), which would alter credit unions' process for reporting consumers' credit information. The House is expected to vote on the legislation as soon as today.
“NAFCU believes an accurate credit report is imperative to consumers and the financial industry as a whole,” wrote Thaler. “While NAFCU is supportive of the legislation’s intent to promote accuracy and increase transparency on credit reports, we believe provisions of H.R. 5332 may lead to unintended consequences and must oppose it in its current form.”
Section 4, Thaler noted, requires furnishers of information – such as credit unions – to review and consider new or additional information each time a consumer disputes the accuracy of information in their credit report. Thaler said this could result in predatory credit repair companies continually disputing accurate information, at a great cost to financial institutions and consumers.
Thaler also flagged that allowing courts injunctive relief could lead to situations where courts may interpret the Fair Credit Reporting Act (FCRA) in a different way than the CFPB, which could lead to confusion amongst financial institutions on how to properly comply with the FCRA.
In addition, Thaler called for clarity in addressing situations when minor transcribing issues occur under the bill’s Social Security Number match requirement.
“NAFCU is supportive of the legislation’s efforts to hold consumer reporting agencies (CRAs) accountable for their obligations under the Gramm-Leach-Bliley Act and to improve data security at the CRAs,” stated Thaler. “We do believe that there should be further examination as to whether the CFPB or the Federal Trade Commission is best suited to establishing appropriate standards.”
In April, NAFCU President and CEO Dan Berger wrote to congressional leadership outlining relief measures that NAFCU and credit unions would like to see included in future legislation. In the letter, he urged Congress to “reject recent efforts aimed at blanket suppression of adverse credit reporting information.”
Berger suggested that the blanket suppression of adverse information could lead to significant changes in how lenders use credit information and could disrupt consumer access to credit.
NAFCU will continue to monitor the legislation.