Some people tell me, “Never read the news, it’ll just depress you.” Well, I do read the news, and it’s upsetting to say the least.
With headlines being dominated by the war in Iran, lingering inflation, and the fallout from the Epstein files, other important developments are going unreported. Since I’ve spent the past two decades as a financial educator, one in particular is upsetting me.
Congress is considering four bills that are a major setback for your consumer rights – and possibly a big hit to your credit score. If even half of them pass, you might pay more for a mortgage, have trouble getting an auto loan, and could be ineligible for “low rate” credit cards.
The bills help businesses that deal with your credit information – which determines your credit score – by letting them off the hook for harmful mistakes they make. That includes the Big 3 credit bureaus (Equifax, Experian, TransUnion) as well as “resellers” who buy data from the Big 3 and sell it to others.
The bills all have titles that actually do the opposite of what they imply…
- FCRA Liability Harmonization Act: Gets rid of punitive damages. Even if a credit bureau is caught violating consumer-protection laws, they wouldn’t face significant financial consequences. It removes the only real incentive these companies have to be accurate under the consumer-friendly Fair Credit Reporting Act (FCRA).
- Credit Access and Inclusion Act: This is being sold as a way to help people build credit by including rent and utility data in their credit scores. The problem is that it overrides state laws that protect your privacy. It also puts people who are struggling with high utility bills at a disadvantage.
- Fair Credit Reporting Reseller Accuracy Act: This gives “resellers” a free pass. If they pass along wrong information from another company, they wouldn’t be held liable – even if the error was so obvious they should’ve caught it.
- Eliminating Fraud in the CFPB’s Complaint Database Act: This is an attempt to silence consumers. It would remove “public narratives” – basically, the stories of what happened to consumers in their own words – from the searchable complaint database maintained by the federal Consumer Financial Protection Bureau. It also forces people to wait 60 days after contacting a company before they can even file a complaint with the government.
Why it matters
After your age and blood pressure, your credit score is probably the most important number in your adult life. It determines how much interest you pay when you get a mortgage, auto loan, or credit card. It also determines if you get those at all.
Your credit score is drawn from your credit reports. Yet the Federal Trade Commission has determined that 1 in 5 credit reports contain at least one error. Keep in mind you have three credit reports, one with each of the Big 3 bureaus I mentioned earlier. So, you personally might have multiple mistakes that are dragging down your credit score.
These might include someone else’s debts being listed as yours, which is most common if your name is similar to someone else’s. Sometimes, though, there’s no logical reason for this to happen. It’s just what happens when millions of credit reports, each with dozens to hundreds of data points, get updated every day.
When a credit bureau makes a mistake, it can be the difference between getting an apartment or being turned away. It’s the reason a small business loan gets denied or a car insurance premium skyrockets. We’re talking about real people who lose thousands of dollars in interest because of information that isn’t even theirs.
What should happen next
Fortunately, all four of these cynically named bills are mired in Congressional committees. (My favorite: The FCRA Liability Harmonization Act is being considered this month by the House Financial Services Subcommittee on Financial Institutions and Consumer Credit.)
Hopefully, these bills will get buried in these committees. We’re in the middle of an affordability crisis, and the last thing people need right now is for the government to make it harder to fix a credit report error. Daily costs are high enough without credit reporting errors making life even more expensive. Congress should focus on fixing those mistakes, not checking off an industry wish list that limits corporate liability.
Protecting big companies from being sued – and making it harder for people to file complaints – doesn’t help anyone who is actually struggling. These days, that’s a lot of us.
