U.S. Agency will now Help Protect Your Credit
Large credit reporting agencies are now going to have to play within the rules. The Consumer Financial Protection Bureau will begin this fall to supervise the 30 largest credit reporting companies, including Experian, Equifax and TransUnion. What this means to you? Credit reporting agencies will have to report accurate information on your credit report. Wrong data on your credit report impacts your home finances are a high degree. Imagine your credit score being lower because a lower credit amount was reported on your credit which increased your debt ratio which in turn adds up that you have more debt than you really do. Your credit score negatively drops. Now when you purchase a car, use your credit card, buy a home, you’ll be paying a higher interest rate and will pay out more money every month.
The new Consumer Financial Protection Bureau will be looking over credit reporting agencies and making sure accurate information is being reported on our precious credit reports. More information can be found at www.consumerfinance.gov.
Large credit reporting companies, which are playing an increasingly important role in the financial lives of Americans, will get new federal oversight from the nation’s consumer watchdog.
The Consumer Financial Protection Bureau said it would begin this fall to supervise the 30 largest credit reporting companies, which account for 94% of the market’s annual receipts.
Among the firms are the big three: Experian Information Solutions Inc.,Equifax Inc.and TransUnion. Combined, they issue more than 3 billion consumer credit reports each year and have files on more than 200 million Americans.
“Credit reporting is at the heart of our lending systems and enables many of us to get credit, afford a home or get an education,” said bureau Director Richard Cordray, who will announce the oversight at a hearing on credit reporting Monday in Detroit.
“Supervising this market will help ensure that it works properly for consumers, lenders and the wider economy,” he said. “There is much at stake in making sure it is both fair and effective.”
One focus of the new oversight will be on the accuracy of information produced by the large credit reporting companies, whose reports hold the key to getting a credit card, a mortgage or even a job, Cordray said.
In addition, the bureau will issue an advisory to consumers about the importance of checking their credit reports and about information on disputing mistakes.
The consumer bureau, created by the sweeping 2010 overhaul of financial rules, oversees banks for compliance with consumer protection rules.
Congress also directed it to supervise residential mortgage companies, payday lenders and private student lenders. And lawmakers gave the bureau the power to expand its oversight to large companies in other consumer finance sectors, such as credit reporting.
In February, the bureau proposed to supervise credit reporting companies and debt collectors because of their broad affect on consumers. Officials hope to complete rules for supervising large debt collection companies this fall.
Its oversight of large credit reporting companies includes other firms that analyze or resell consumer credit data. Rules governing them will take effect Sept. 30 and will include on-site exams by consumer bureau employees.
“Up to this point, no single federal government agency could access all the information necessary to generate a complete picture of what was happening inside these companies,” Cordray said in written remarks prepared for Monday’s hearing.
“Our country’s credit system is a resource in which we all have much at stake — both directly and indirectly — and we need this system to operate effectively in order for the credit markets to work properly and fairly,” he said.
Accuracy of credit reports and resolution of disputes are the key areas for oversight, he said.
“The wrong information may cause them to be denied a loan, to be charged a much higher interest rate or to be passed over for a job, causing them serious economic hardship,” Cordray said. “And inaccurate credit reports also deprive lenders of essential information they need to assess credit risk properly.
Cordray said consumers have complained about “unreasonably laborious processes to get errors removed from their files.”
source: LA Times
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