The DSNews article reports that Representative Maxine Waters (D-CA) recently introduced the “Fair Credit Reporting Improvement Act of 2014” (Article) which would change the way consumer credit is reported and scored.
(Mike Vitali’s comments are in parenthesis) Proposed changes include:
•Shortening the time that adverse information remains on a consumer’s credit report from seven to four years (not so bad, especially in light of the effects of the recent downturn in our economy)
•Removing adverse information from credit reports that is the result of illegal, deceptive, or fraudulent practices of predatory mortgage lenders and servicers (key is how will this be determined)
•Removing settled debt, such as medical expenses, which is not necessarily a reliable predictor of a consumer’s ability to repay a loan or worthiness to obtain credit (I think it should depend on volume and frequency)
•Removing private student loan defaults when the distressed borrower makes nine consecutive monthly on-time payments (before or after the default)
•Requiring furnishers to retain all records as long as adverse information remains on a consumer’s credit report. (good idea)
MV says, “I welcome any change which would improve the process and more accurately reflect a consumer’s willingness to repay their debts. However, we need to make sure these are not changes which could result in masking a risky borrower. Especially in view of the new ATR rules. This needs some close scrutiny. I’m sure MBA will weigh in.”