The credit act is a piece of legislation that aims to protect consumers when it comes to their credit arrangements. It sets out rules regarding how credit providers can market their services, what information they must provide to customers, and the timelines for resolving disputes. One of the key aims of the act is to prevent lenders from taking advantage of consumers by charging exorbitant interest rates or fees. As a result, the credit act is an essential tool for consumers who wish to access credit in a responsible and fair way. Understanding the provisions of this act can help consumers make informed decisions about their borrowing arrangements and ensure they are treated fairly by lenders.
USPIRG announced that the House of Representatives passed the CREDIT Act (Credit Reporting Enhancement, Disclosure, Innovation, and Transparency) Act of 2020 (HR3621). It is on its way for review by the Senate.
Although credit card issuers provide substantial input as data furnishers, the target is mostly medical debt, the reporting window on bankruptcies, the ability to correct a mistake, and a more narrow use of credit reports for employment purposes.
The full text is here.
Six goals are:
Take steps to make it easier to fix mistakes in credit reports.
Improve free annual credit reports, which are already mandated by law, by including each consumer’s credit score.
Narrowly restrict the use of credit reports for employment purposes.
Limit the reporting of medical debt, which is both often incorrect, and not predictive of credit default.
Shorten the period delinquencies can be reported on consumer reports from 7 to 4 years and lower the window for most bankruptcies from 10 to 7 years.
Give struggling private student loan borrowers a chance to rehabilitate their credit.
Inside Arm, a creditor side news source indicates that the bill “incorporates several other House bills including”:
H.R. 3642, the Improving Credit Reporting for All Consumers Act, a bill sponsored by Representative Alma Adams;
H.R. 3622, the Restoring Unfairly Impaired Credit and Protecting Consumers Act, a bill sponsored by Representative Rashida Tlaib;
H.R. 3614, the Restricting Use of Credit Checks for Employment Decisions Act, a bill sponsored by Representative Al Lawson;
H.R. 3621, the Student Borrower Credit Improvement Act, a bill sponsored by Representative Pressley;
H.R. 3629, the Clarity in Credit Score Formation Act sponsored by Representative Stephen Lynch; and
H.R. 3618, the Free Credit Scores for Consumers Act sponsored by Representative Joyce Beatty.
This bill still needs to pass the U.S. Senate, but it is no surprise to see a suggestion for reducing credit bureau complaints during an election year.
Overview by Brian Riley, Director, Credit Advisory Service at Mercator Advisory Group
