It’s not always easy to get stubborn credit report errors permanently cleared from a report. But if a group of Democratic senators get their way, consumers will one day have a much easier time forcing legitimate errors off their reports.
On April 9, Sen. Sherrod Brown of Ohio and Sen. Brian Schatz of Hawaii announced new legislation that, if passed, will force credit reporting agencies to do a better job investigating and correcting mistakes.
Senate Bill 2244, dubbed the “Stop Errors in Credit Use and Reporting (SECURE) Act,” would provide consumers with more information about their credit histories — including an additional free report if they’re rejected for a loan — and give them unprecedented legal ammunition to fight back against the credit bureaus if the bureaus refuse to correct legitimate mistakes.
“When the stakes are this high and your credit can affect whether you get a job or house, consumers deserve to be on a level playing field with banks,” said Sen. Schatz in a press release. “Our legislation will make credit reports more accurate, help people to correct any mistakes, give federal agencies tools to enforce the law and hold reporting data furnishers accountable for their mistakes.”
The proposal’s outlines
The proposal will contain several components — some vaguely described — designed to improve the notoriously perfunctory dispute process and empower consumers with erroneous reports.
The actual text of the bill has yet to be publicly released. But according to the release announcing the SECURE Act, the bill would:
- Ask the CFPB to tackle and improve credit report accuracy. The press release doesn’t specify what lawmakers want changed about the way credit bureaus now process consumers’ data and investigate disputes. But it does ask the Consumer Financial Protection Bureau to identify specific steps the credit bureaus can follow to improve accuracy.
- Require credit reporting agencies to forward consumers’ documents. Until recently, credit bureaus typically didn’t include consumers’ supporting documents when they forwarded disputes onto lenders. But they do now. Last year, under pressure from the CFPB, the credit reporting industry upgraded the online dispute system, known as e-Oscar, so that it accepts consumers’ documents. The industry also made it possible for the first time ever for consumers to upload documents when they file dispute online. The credit reporting industry says that it now forwards any documents a consumer sends. The act would change the voluntary action into a requirement.
- Give consumers the legal firepower to force credit bureaus to stop reporting incorrect information. The bill would also give U.S. courts new authority to bar credit reporting agencies from continuing to report legitimate errors. Currently, consumers can sue credit reporting agencies for damages. But they can’t ask for “injunctive relief,” which is a legal remedy that allows a court to forcibly stop a company from doing something (such as reporting inaccurate information).
- Educate consumers about their credit. In addition, the bill would give consumers a free copy of their credit score, along with their annual reports, and it would require companies to pass on a free report if they deny a consumer a loan or offer less-than-favorable terms. Currently, lenders just have to send you a free credit score if you’re denied a loan or offered unfavorable terms.
According to the release, the bill also gives the Federal Trade Commission more power to “stop sloppy practices.” However, it’s unclear from the information that’s currently available what that additional authority would actually entail.
Will it pass?
Probably not. The legislation was just introduced and hasn’t even been publicly released yet. So it will be awhile before we find out if it even passes committee.
This proposal has an even slimmer chance of making it through since it currently doesn’t have a single Republican sponsor. (The bill’s other sponsors are Democrats Elizabeth Warren of Massachusetts and Richard Blumenthal of Connecticut and Independent Bernie Sanders of Vermont.)
That doesn’t mean, however, that it has no chance of making it through — some day. Bills that die young are often re-introduced in different forms several times before lawmakers give up. And sometimes bills get passed years after they were first introduced. So we could see some version of this bill make it through, eventually. But if it does, it will almost certainly look very different from what was introduced this week.