On Wednesday 9th, April 2014 a new consumer credit act was put to the Senate by Senators Brian Schatz (HI) and Sherrod Brown (OH), called the SECURE act (Stop Errors in Credit Use and Reporting). This Act was released after a report by the Consumers Union showed 40 million Americans or more could be adversely affected by credit report errors.
Key Quotes
In today’s economy, it is critical that consumer’s have access to a safe and reliable way of checking their credit reports and scores
– Senator Sherrod Brown (OH)
Errors in a credit report can make the difference between whether someone can live the American Dream and buy a home or even get a job…
…Your credit can affect whether you get a job or house, consumers deserve to be on a level playing field with banks. Our legislation will make credit reports more accurate, help people to correct any mistakes, give federal agencies more tools to enforce the law, and hold reporting agencies and data furnishers accountable for their mistakes
Senators Brian Schatz (HI)
Highlights Of The SECURE Act:
- Give consumers the option to request a free credit score along with their annual free credit report
- Give the FTC new authority to stop sloppy practices
- Give courts the ability to stop a CRA from reporting inaccuracies
- National registry of credit reporting agents (companies that pass your information onto credit reporting agencies/credit bureaus. These credit reporting agents are better know as credit data furnishers in the industry)
- Require the CFPB to develop procedures for credit reporting agencies to follow to help improve accuracy
- Require that credit reporting agencies pass on all consumer disputes and supporting evidence to the appropriate data furnisher so they can probably review the consumers claim
- Require a consumers credit report to be freely supplied with a notice of adverse action (e.g if you’re denied for a credit card or receive less than favorable terms at the moment you receive any credit score that was used in that decision and it’s score range, but not your full credit report)
- Legal rights to receive compensation from credit bureaus and banks that deny consumers based on incorrect information
Accessing The Act
There are three different formats that the act is currently viewable in:
My Thoughts
Despite the catchy name (SECURE, you’ve got to love their commitment to headline grabbing acronyms, which they employed with great effect with the CARD & FACT acts), this piece of legislation will be a great step forward for consumer rights. I have a few niggling issues that I’d like addressed by those supporting the bill first though
- The free credit score received yearly needs to be relevant. Consumers have hundreds, if not thousands of different credit scores. There is no point in giving consumers access to a free credit score if it is not similar to a credit score that lenders will look at. I’d suggest that consumers should have access to whichever score is most used by lenders in the previous year (most likely to be FICO 2008 classic version to begin with).
- Change to the FCRA to reduce the amount of time given to credit bureaus to fix errors. At the moment credit reporting agencies (often called credit bureaus) have a period of 30 days to fix credit report errors, they also have a period of 45 days if the report was accessed for free via annualcreditreport.com. At the very least it should be a flat 30 days across the board. I don’t think it’s unreasonable that redit reporting agencies should have less time to complete these changes, considering that all fact checking is now done electronically (and presumably near instantaneously).
My Doubts
Selling consumer credit scores is big business, Credit Karma recently received $85 million in additional capital in series C funding with the round led by Google ventures (bringing their total raised to $118 million). Their business revolves around consumers wanting access to their credit score for free, they’ve tried to shift the focus from this feature set to offering other tools (such as credit monitoring, being able to see the average credit score of those approved for specific credit cards and so on) but it’s still how they get customers through their door. There is also Credit Sesame with $19.35 million in funding (who have also started to shift away from credit scores only with the introduction of free identity theft insurance) and Quizzle with an unknown level of funds raised. That’s close to $150 million that’s been poured into consumer credit score companies already and this doesn’t even include the major player FICO who also sells credit scores to financial institutions (market cap of $1.8 billion).
The point is that none of these companies are going to be happy with consumers having access to their credit scores for free and I expect them to put significant lobbying power and dollars into fighting this legislation. I do have hope though, a lot of people were making a lot of money selling credit reports until the FACT amendment was added to the FCRA which allowed consumers free access to their credit reports.
Ken Clayton, Chief Counsel for the American Bankers Association has already come out with the following statement:
What To Do Next
It’s really going to be up to consumers and consumer advocacy groups to make sure their voices are heard loud and clear on this issue. If you want free access to your credit scores and more consumer rights when it comes to inaccurate or inaccurate information on your credit report you should do the following.
- Send a letter to your senator. You can find your local senator by clicking here and entering your zip code (their is an address field but it’s optional). We’ve included a sample letter which you can edit and print by clicking here.
- Share this issue with your friends, family and local community. The more people that know about this new piece of legislation, the better. Everybody I speak to wants access to this information, some of them just don’t know that this act has been put before the US Senate. Share it on Facebook, Twitter, Pinterest, Reddit, your local community center, Church or just with friends and family whilst having something to eat.
