WASHINGTON — Rep. Maxine Waters, the top Democrat on the House Financial Services Committee, introduced legislation Thursday to reform consumer credit reporting.
The California Democrat's bill would give the Consumer Financial Protection Bureau the power to oversee the development of credit scoring models, including alternative credit scoring models that could help borrowers with thin credit profiles. It would also give borrowers more ability to fix problems with their credit scores.
The credit reporting process is often opaque to the consumers that it tracks, making error resolution difficult. The system is also often ill-equipped to account for extenuating circumstances that can lead to a black mark.
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Key Democrats abruptly reversed course Tuesday concerning a monetary policy tool, saying they now support the Federal Reserve's ability to pay interest on banks' excess reserves.
May 17 -
New York Attorney General Eric Schneiderman is urging banks to reevaluate how they use credit bureaus like ChexSystems, after his investigation found that inaccurate data reported by banks is preventing some consumers from opening checking and savings accounts. Three banks already have agreed to modify their use of ChexSystems in screening potential customers.
April 27 -
Banks have made changes to overdrafts, such as lowering fees offering clearer explanations. They better, as the CFPB will soon offer new rules for overdrafts. Plus, overdraft revenue has declined at many banks. Still unanswered is the question of how to offer short-term credit, if overdrafts disappear.
January 5 -
JPMorgan Chase will overhaul customer screening procedures to let more low-income consumers open checking and savings accounts under an agreement announced Tuesday with New York Attorney General Eric Schneiderman.
June 30
Under the bill, the CFPB would be required to consult with the Federal Housing Finance Agency on reviewing and updating the credit scoring methods used by Fannie Mae and Freddie Mac, which could expand their credit box.
The Comprehensive Consumer Credit Reporting Reform Act of 2016 would also reduce the time that negative information stays on a credit report from seven years to four. For bankruptcies it would be reduced from 10 years to seven.
Victims of predatory student loans, medical debts and unfair mortgage lending practices also would get a reprieve under the bill.
