Credit reporting companies would be subject to supervision and examination authority by the Consumer Financial Protection Bureau (CFPB) and would be barred from using Social Security numbers, under new legislation proposed by Rep. Patrick McHenry (R-N.C.).
Unlike earlier bills that have passed through committee without any Republican votes, this bill could have legs, with Rep. McHenry, the ranking member of the House Financial Services Committee, promising bipartisan support.
What happened
With Democrats controlling the lower house of Congress, it may come as no surprise that the House Financial Services Committee has now passed several credit reporting-related bills out of committee, but with zero Republican support. With the GOP controlling the Senate, and a Republican in the Oval Office, such legislation has been viewed as dead on arrival.
But now a Republican has stepped up with a proposal that seeks change. Characterizing the credit reporting industry as “ripe for reform,” Rep. McHenry introduced H.R. 3821, a bill that would address several issues. In addition to granting the CFPB oversight of the industry, the proposed legislation would seek to improve the “inefficient process” used by credit reporting agencies for a parent to request a security freeze of their child’s credit.
Consumers found to have been impacted by predatory mortgage, student lending or financial abuse (as determined by a court of law or through a settlement agreement) would be provided with a way to have negative information removed from their consumer reports, and all paid, nonelective medical debt would be removed from a consumer’s credit report, pursuant to the measure.
Perhaps the biggest challenge: Credit reporting agencies would be prevented under the bill from using Social Security numbers for verification purposes. Given that these identifiers are perhaps the most common and accepted way to identify individuals seeking credit, this proposal may be the biggest hurdle to passage.
Notwithstanding the above, Rep. McHenry described his proposal as a compromise position with proposed legislation introduced by House Democrats.
“Credit reporting agencies have failed to protect consumers’ most sensitive, personal information and have been allowed to operate as an oligarchy,” he said in a statement. “While Republicans and Democrats agree it’s time for change, my colleagues across the aisle have taken a one-sided approach, which will ultimately decrease Americans’ access to credit. Instead, my legislation combines bipartisan solutions that provide thoughtful oversight and examination of this industry, helping achieve our goal: protecting American families.”
To read H.R. 3821, click here.
Why it matters
While not guaranteed with today’s divided Congress, meaningful Republican support is critical for meaningful credit reporting reform. And Rep. McHenry’s legislation might just have the requisite support to make it to the President’s desk.
Adding to the mix, the congressman revealed his proposed legislation just a few days before the announcement of Equifax’s $575 million settlement with the CFPB, Federal Trade Commission, and 50 states and territories related to its 2017 data breach that allegedly impacted at least 147 million consumers. As part of the deal, Equifax agreed to fund a study on possible alternatives to identifying U.S. residents with Social Security numbers—a piece of Rep. McHenry’s bill. Although Democratic lawmakers have yet to sign on to H.R. 3821, support could be forthcoming with credit reporting agencies in the news.