‘Disruptive’ changes to FCRA could impact financial access

While the Fair Credit Reporting Act (FCRA) should be examined for necessary amendments and modernized, CUNA has concerns about the negative impact that could result from “well-intentioned but overly disruptive changes to the system. CUNA submitted a letter for a House Financial Services Committee hearing Tuesday on proposals to overhaul the credit reporting system.

“The credit reporting system plays a critical role in the financial lives of Americans as the data collected and maintained are influential metrics for many lending decisions… CUNA supports the purpose of the FCRA and its importance in ensuring consumers’ financial information is handled and used in an appropriate and responsible manner,” the letter reads. “Credit unions, as both users and furnishers of information to the credit reporting agencies (CRAs), have a substantial interest in promoting the accuracy and quality of the data contained in the system.”

CUNA added that bills considered in the hearing would make “sweeping changes” to the credit reporting framework, most notably:

• Establishing limits on the data contained in credit reports;
• Creating a public credit reporting agency;
• Substantially increasing the power and influence of the partisan Consumer Financial Protection Bureau (CFPB.

CUNA notes that the FCRA has been an “area of growing litigation risk” over the past decade and the proposed legislation could further exacerbate the problem of frivolous lawsuits.

“Ultimately, there is no evidence to support the notion that a public credit reporting agency would be more transparent, innovative, or inclusive than the current private system. In fact, given the Executive Branch’s firm control over the CFPB and its leadership, a public CRA could allow an administration to meddle in the nation’s lending ecosystem to the detriment of fair and equitable access to credit,” the letter reads. “This type of heavy-handed government control could serve to undermine confidence in the integrity of the credit reporting system itself, which is an essential tool in the credit underwriting process. The foreseeable problems that could arise down the road from this proposed ‘solution’ warrant a serious reconsideration of the legislation.”