Washington, D.C. – U.S.  Rep. Terri Sewell (AL-07) voted today in favor of the Comprehensive Credit Reporting Enhancement, Disclosure, Innovation, and Transparency Act of 2020 (Comprehensive CREDIT Act), legislation that addresses many credit reporting flaws by enhancing consumers’ rights, requiring more transparency over the consumer reporting and credit scoring processes, and increasing the accountability of credit reporting agencies (CRAs) and companies that develop credit scoring models.

“More than 40 million Americans have inaccurate credit reports, which can determine job opportunities, how much you pay for car insurance and whether you will qualify to rent an apartment. What’s more, consumers have little recourse to correct errors on their reports. The Comprehensive CREDIT Act will help fix this flawed system and empower consumers to rehabilitate their damaged credit,” Sewell said. “I am especially proud of the provisions in the bill that repair credit reports of consumers who have been victimized by predatory lenders and protect those with debt from medically-necessary procedures.”

The bill overhauls the credit reporting system by empowering consumers with more control of their data and requiring CRAs like Equifax, TransUnion and Experian, to better ensure that the information on consumer credit reports is accurate and complete.

Specifically, the Comprehensive CREDIT Act of 2020:

• Transfers Burdens from Consumers to CRAs and Creditors:
  • Gives consumers the right to appeal the results of initial disputes conducted by CRAs and creditors that furnish information to the CRAs.
  • Mandates consumers are provided free copies of any documents relied on by CRAs or furnishers to determine the accuracy or completeness of disputed items.
• Restricts the Use of Credit Information for Employment:
  • Only allows the use of credit information for employment purposes when it is required by local, state, or Federal law or for national security clearances.
• Shortens the amount of time negative information stays on a credit report:
  • Reduces the punitive retention periods that most adverse credit information remains on reports from 7 years to 4 years.
  • Bankruptcies would remain on reports no more than 7 years compared to the current 10 years.
• Restores the Impaired Credit of Victims of Predatory Activities and Unfair Practices:
  • Allows borrowers, who have been victimized by predatory lenders or servicers, to have adverse information relating to their mortgages taken off their reports.
  • Requires the removal of negative information from reports relating to private education loans obtained to attend deceptive, fraudulent for-profit colleges.
• Expands Free Access to and Provides More Meaningful Information About, Consumer Reports and Credit Scores:
  • Reduces consumers’ confusion about their creditworthiness by increasing instances in which consumers are given free scores, such as when they obtain their free annual reports and after disputing any errors on their reports.
  • Provides consumers with free credit scores when they apply for private education, car, or mortgage loans.
• Provides Relief for Consumers Struggling with Medical Debt:
  • Prohibits reporting debt relating to medically necessary procedures and delaying reporting adverse information by one year for other medical debt.
• Rehabilitates the Credit Standing of Private Education Loan Borrowers:
  • Empowers distressed private education loan borrowers to rehabilitate their damaged credit by requiring adverse information relating to delinquent or defaulted loans be removed from reports.
  • Provides reasonable grace periods for those facing extenuating and unusual life circumstances, such as certain service members and natural disaster victims.
• Creates Greater Transparency on Credit Scoring Models and the Use of Alternative Data:
  • Promotes innovation by examining the use of non-traditional data in credit underwriting; and
  • Enhances the Consumer Financial Protection Bureau’s authority to monitor the development of credit scoring models and prohibit factors that are inappropriate.

The bill now heads to the Senate for consideration.