U.S. Representative Ed Royce (R-Calif.) and U.S. Representative Rubén Hinojosa (D-Texas) recently introduced H.R. 5446, the Facilitating Access to Credit Act of 2014. The bill amends the Credit Repair Organizations Act (CROA) to better allow national credit bureaus the ability to assist consumers trying to improve their credit score, while keeping in place CROA's consumer protections against firms' false claims of credit score manipulation:
“The benefits of a good credit score cannot be understated, as anyone who has taken out a mortgage, purchased a car, or signed up for student loans will tell you. The Facilitating Access to Credit Act will ensure that reputable national credit bureaus can help people who want to turn their credit score around but simply don't know how,” said Rep. Royce. “A more financially literate and creditworthy consumer base is good for American businesses, the American economy, and hardworking American families saving up for that big purchase.”
"Having a good credit score can mean the difference between buying a home, a car, or neither," said Rep. Hinojosa. "Credit scores also play an important role in today's economy, but the average consumer sometimes has a difficult time obtaining the information that could help them improve their credit scores. It is my opinion that the national credit reporting agencies are unnecessarily being prevented from providing credit advice to consumers in a timely manner. As a leading advocate for financial literacy on Capitol Hill, I believe that Congress should remove those barriers that hinder consumers from obtaining valuable financial information."
CROA has been interpreted broadly by courts to apply to national credit bureaus, even though these organizations were never intended to be included within the statute’s jurisdiction. Signed by President Bill Clinton in 1996, CROA was intended to stop entities who make false claims that they can “fix your credit” by removing negative information from a consumer’s credit history. Credit history information, whether positive or negative, cannot be removed from a consumer’s record so long as it is accurate, therefore making such claims is misleading and dishonest.
Because courts have construed the broad definition of a credit repair organization in CROA to include credit bureaus, consumers have to navigate the CROA requirements before a credit bureau can provide individualized feedback about a consumer’s credit score. The most significant barrier is that consumers must currently wait at least three business days from when they sign up for credit education to actually receive any information on how they can improve their credit scores. The consumer cannot waive this waiting period no matter what. A three-day wait makes little sense in the Internet-era and alienates consumers attempting to better their credit scores.
The Facilitating Access to Credit Act of 2014 would exempt well-known and Consumer Financial Protection Bureau (CFPB) supervised organizations such as Experian, Equifax, and TransUnion from CROA limitations that make getting information on improving a credit score needlessly cumbersome. The legislation keeps intact the critical consumer protections of CROA, as it opens up the relationship between consumers and trustworthy firms that can assist with credit history repair.
Reps. Royce and Hinojosa, both senior members of the House Financial Services Committee, introduced the Facilitating Access to Credit Act of 2014 on September 10, 2014, and urge swift action from their colleagues to advance this bipartisan legislation.
