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Nearly 25 years after a landmark deal and two subsequent legislative overhauls, glitches in the credit reporting system remain widespread. As a result, regulators and law enforcement officials are again raising the stakes for the credit reporting industry, but critics fear it may not be enough.
July 7
WASHINGTON Senate Democrats unveiled a bill Wednesday that would require banks and debt buyers to ensure that a consumer's credit report is updated when debt is extinguished through bankruptcy.
The Consumer Reporting Fairness Act would require financial institutions and other creditors to update the credit bureaus when a borrower declares bankruptcy, so that discharged debt is appropriately removed from the consumer's credit report. The move is part of an ongoing effort by lawmakers, state officials and the Consumer Financial Protection Bureau to improve the accuracy of credit reports.
"During the financial crisis, more than 50 million people saw their credit scores fall due to foreclosures and financial hardships. Many turned to bankruptcy, but are still haunted by debt on their credit report that they no longer owe," said Sen. Sherrod Brown, D-Ohio, one of the bill's sponsors, said in a press release. "This bill would ensure that debts prior to bankruptcy aren't in effect double counted and don't continue to make it difficult for consumers to get a job or secure a loan for a home."
The legislation is co-sponsored by Sens. Richard Blumenthal, D-Conn., Dick Durbin, D-Ill., Al Franken, D-Minn., and Jeff Merkley, D-Ore.
