When Attorney General Janet Reno said in a recent speech that "credit is the lifeblood of this nation," she was speaking a truth that the average consumer often takes for granted. The high standard of living in this country depends heavily on our having the world's most efficient credit-granting system.

The cornerstone of this system is a lender's ability to quickly and accurately assess risk by using a credit report. Often reviled in the popular media, credit reports and the agencies that compile them provide the essential information lenders need in order to extend credit to most consumers.

It is obvious that banks and other creditors appreciate the importance of our credit reporting system. But what do consumers think of the system? Do they believe it has value to them? Is it a fair way to assess credit risk?

Harris Poll

These were some of the questions posed to consumers in a recent Louis Harris & Associates survey conducted in conjunction with Alan F. Westin and sponsored by Visa and MasterCard.

Mr. Westin, professor of public law and government at Columbia University and a leading authority on privacy issues, was instrumental in framing the questions and interpreting the survey results.

As an academic adviser to the Harris organization for more than 15 years, Mr. Westin has long been at the forefront of pirvacy research. His insight and experience were key to exploring the underlying sources of respondents' attitudes and beliefs.

Consumers See Benefits

While many newspaper articles and television reports might lead one to believe differently, the answers given in this Harris/Westin survey clearly show that Americans give high approval to our country's credit reporting system.

In fact, more than eight out of every 10 see the current credit reporting system as beneficial to consumers -- facilitating the availability of consumer credit, keeping credit costs down, speeding up credit decisions, and opening up credit opportunities to many who cannot offer security for loans.

Most important, these views are held by large minorities of all demographic groups in Harris surveys -- blacks, Hispanics, and whites; young, middle-aged, and older persons; women and men; people of all educational levels; all income levels; in cities, suburbs, and rural areas; and conservatives, moderates, and liberals.

Adequate Protection

In the past, one of the central concerns of consumers when discussing the credit reporting system was their right to privacy. This latest Harris/Westin survey documents a shift in that thinking: 51% of the public now believe their privacy rights are "adequately protected today by law or business practice."

This finding, 14% more than in a survey only three years ago, points to increased consumer confidence in industry responsibility and in existing statutes enforcing privacy rights.

The Harris/Westin results also show consumer preference for "self-policing" by the credit industry, as opposed to increased government regulation. When surveys asked respondents to agree or disagree with the following statement, "If companies and industry associations adopt good voluntary privacy policies, that would be better than enacting government regulations in this country," the results were strongly in favor of self-policing. Two-thirds of the public agreed with the statement.

Federal Law Favored

In contemplating regulation of credit reporting, the survey respondents were strongly in favor of a single federal law, as opposed to differing state laws. Every demographic group answered in favor of a uniform federal law that would preempt state statutes.

Sixty-seven percent of the respondents said a uniform federal standard would produce "more accurate credit reports," and 76% said it would also mean "less confusion for consumers." Sixty-eight percent of the public felt that federal rules would be a "more efficient way for consumers to get credit."

Another important factor in our credit granting system is the ability of a company to share customer information with the affiliates or subsidiaries. When asked about this practice, 63% of the public felt it acceptable for "subsidiaries of the same corporate family" to share customer information "to make offers in services or products."

Competition Welcome

While consumer protection groups are adamant about protecting consumers' privacy in this area, consumers appear to welcome the increased competition for their business brought by information sharing among affiliated companies.

Specifically, 71% of respondents said it is acceptable to offer a credit card to customers who have a mortgage with one of the card issuers' other subsidiaries; 77%, to offer a credit card to customers who have a checking account with one of the other subsidiaries; 70%, to offer insurance to customers who have a loan with one of the other subsidiaries; and 71%, to offer mutual funds to customers who have a checking account or loan with one of the other subsidiaries.

While currently proposed legislation may or may not pass, the public debate over the credit granting system will continue. The results of this survey provide important input to that debate, as the public's feelings and perceptions about or credit granting system are key considerations.

The data clearly show that, while the public is concerned about the protection of privacy, it is equally concerned about their ability to get and use credit. Increasing -- rather than inhibiting -- the ability to access that which the attorney general refers to as "lifeblood" should be the desired outcome of our debate.

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