WASHINGTON Rep. Maxine Waters, D-Calif., unveiled draft legislation Wednesday aimed at protecting consumers from errors in their credit reports.
The bill would seek to remove information from credit reports that are detrimental to borrowers as a result of their taking out a predatory loan, reduce by three years the period during which adverse information can remain on a credit report and require credit data furnishers to retain records to verify credit reports are accurate and complete, among other provisions.
"Credit reports are no longer just used exclusively by lenders in making a credit decision. More and more, credit reports are used in a variety of ways, from employment decisions, to determining a consumer's ability to rent a home, buy a car, or purchase insurance," Waters, the top Democrat on the Financial Services Committee, said in a press release. "A person's credit report is too important in determining access to a wide array of opportunities for these reports to contain inaccurate and incomplete information."
Waters' office cited Federal Trade Commission statistics showing that one in five consumers or roughly 40 million has had an error on one of their credit reports, with errors increasing the cost of credit in about 10 million of those cases.
"This proposal addresses many of the flaws with the existing consumer reporting system, by making common-sense changes that enhance consumers' rights, create more transparency over the consumer reporting and credit scoring process, and increase the accountability of credit reporting agencies, furnishers, and companies that develop credit scoring models and formulas," she said.
The bill would remove from reports debt that has been paid off or settled, as well as remove adverse information related to delinquent private student loans when a borrower has made consecutive on-time monthly payments.