July 16th, 2012
CFPB Update: Credit Bureau Oversight
4 Comments |
The Consumer Financial Protection Bureau (CFPB) today announced that the credit bureaus will be subject to its federal supervision program. The announcement was made during a field hearing in Detroit, where CFPB Director Richard Cordray said, “[The credit reporting] system must merit our trust and confidence for the credit markets to be perceived as fair.”
Why does it matter?
Credit bureaus collect consumer information from creditors and lenders. This information is gathered together in a consumer credit report. The most well-known credit reports come from the three largest bureaus: Equifax, Experian and TransUnion.
Credit reports, along with credit scores, are used by creditors to decide whether or not to lend to you, by landlords to decide whether or not to rent an apartment to you, and even by employers to decide whether or not to hire you.
What does it all mean?
Cordray described three specific goals that the bureau has related to credit bureau oversight:
- The bureau will ensure that the information being reported to the bureaus from creditors is reliable. “We want to deepen our understanding of the recordkeeping and reporting practices by lenders,” Cordray said, “and we want to see what the credit reporting companies can be doing to test and screen for the quality of the information they receive.”
- It will review the systems that credit bureaus have in place to collect and maintain the information in consumer credit reports. “The wrong information may cause [consumers] to be denied for a loan, to be charged a much higher interest rate, or to be passed over for a job.”
- It will investigate the process that consumers currently have to undergo in order to dispute credit reporting errors. “When consumers find what they perceive to be erroneous information on their credit reports, they should not be burdened by unreasonably laborious processes to get errors removed from their files.
Read the CFPB’s Consumer Advisory about credit reporting.
Read our past CFPB updates: