Legislation introduced in the Senate would amend the Fair Credit Reporting Act (FCRA) and ultimately require consumer data furnishers to provide "free disclosure after notice of adverse action or offer of credit on materially less favorable terms."
In short, the "Stop Errors in Credit Use and Reporting Act" is designed to protect consumers from inaccurate credit reports and credit scores.
Sens. Sherrod Brown (D-Ohio), and Brian Schatz, (D-Hawaii) introduced the measure.
Credit reporting agencies, under the FCRA, must "follow reasonable procedures to assure maximum possible accuracy of information contained in credit reports. Still, credit reports often contain far too many preventable errors, according to a summary of the legislation.
In todays economy, it is critical that consumers have access to a safe and reliable way of checking their credit reports and scores, Brown said. This legislation ensures consumers have the resources they need to correct credit report errors that could potentially impact future employment opportunities, credit applications, and other transactions that require a good credit score. Consumers would also have access to a free annual credit score and report.
Some specific language in the legislation includes: "Not later than 14 days after the date on which a consumer reporting agency receives a notification [of accuracy concerns], or from a debt collection agency affiliated with the consumer reporting agency, the consumer reporting agency shall make, without charge to the consumer, all disclosures required in accordance with the rules "
Other key parts of the legislation include: requiring the Consumer Financial Protection Bureau to develop procedures for credit reporting agencies to follow as a means to improve accuracy; giving consumers the ability to request a free credit score along with their annual free credit report to see what credit they might be eligible for; making sure agencies send consumers disputes and supporting documents to the creditor when there is an error on a report, so that they can thoroughly review the consumers claim; giving courts the ability to stop a credit reporting agency from reporting inaccurate information and provide the Federal Trade Commission with new authority to stop such practices; and, making it easier for consumers to spot errors in their credit reports by requiring that consumers receive a free copy of their credit report if anyone makes an unfavorable decision based on the report.
The legislation is under review by the Committee on Banking, Housing and Urban Affairs.