WASHINGTON—Calling for an accurate, fair, transparent, and equitable credit reporting system, NAFCU sent a letter to the House Financial Services Committee ahead of a hearing that examined proposals to overhaul credit reporting.
In the letter NAFCU Vice President of Legislative Affairs Brad Thaler repeated NAFCU's commitment to a fair credit reporting system and called on the committee to reject efforts aimed at a “blanket suppression of adverse credit reporting information that may lead to significant changes in how lenders use credit information and could disrupt consumer access to credit.”
NAFCU said it has concerns with proposals under consideration by the committee that go "too far in suppressing adverse information and could diminish the accuracy of the credit reporting system."
‘A Better Step’
"A better step would be to encourage efforts to allow credit reporting to reflect loans where payments are deferred or in forbearance, so these loans do not negatively affect a consumer's credit score," recommended Thaler.
An example of this approach, Thaler noted, is the relief found in Section 4021 of the CARES Act, which requires furnishers of information to credit reporting agencies (CRAs) to report an account current if an accommodation has been made during the pandemic. In addition, accounts delinquent prior to the accommodation are reported as such unless the consumer brings the account current during the accommodation.
"This approach strikes a good balance by preserving the accuracy of credit reports while also protecting the credit profiles of consumers who receive payment relief due to the pandemic," added Thaler.
Other Concerns
In addition, Thaler expressed NAFCU's concerns with legislation to create a government-run credit bureau under the CFPB. NAFCU highlighted concerns with the cost-effectiveness of establishing and running such a credit bureau, as well as concerns about consumer privacy and data security. Additionally, Thaler said there are benefits of the current, private sector credit reporting industry.
"We believe that consumers and lenders alike benefit from a robust, competitive, and innovative private sector credit reporting industry that is constantly evolving to consider new sources of data and increase the scope of the system to include underserved consumers,” wrote Thaler. “Replacing this system with a government-run credit bureau will stifle innovation and competition and have the unintended consequence of reducing access to credit.”