The Consumer Financial Protection Bureau head announced Monday plans to begin regulation of credit reporting agencies.
In a field hearing in Detroit, CFPB Director Richard Cordray said the impact a credit report can have on so many aspects of consumers’ lives is why the bureau is turning its attention to the private credit reporting industry.
“We have heard reports since from many consumers that their credit reports are not accurate, and it is difficult to get them corrected,” Cordray said. “Because of the critical role that credit reports play in consumers’ lives, it is our job to make sure we understand the full extent of these problems and address them effectively.”
Under the Dodd-Frank Wall Street Reform and Consumer Protection Act, the CFPB has the power to supervise nonbank “larger participants” in the financial products industry. The big three credit reporting agencies in the U.S. — Experian, Equifax and TransUnion — are the most recognizable to consumers, but the new rule will not regulate only the big three. The CFPB said in a press release that its new supervisory powers will extend to any credit reporting agency with more than $7 million in receipts — a rule that will blanket about 94% of the industry.
The rule will take effect Sept. 30 with a three-pronged focus: determining accuracy of information reported to credit bureaus, understanding how the bureaus handle the information and ensuring that the bureaus quickly and easily deal with error disputes.
“As I said earlier, this country’s credit reporting system is a resource in which we all have a stake,” Cordray said. “That system must merit our trust and confidence for the credit markets to be perceived as fair. We all share in this responsibility.”
Cordray also pushed consumers to take control of their own credit issues.
“Keep in mind that nobody else has as much incentive to protect you as you have to protect yourself,” he said. “Checking your credit report can reveal odd entries you do not recognize, which may be signs of identity theft. It also can uncover errors that will hurt your creditworthiness unless you dispute them and get them fixed. I urge every consumer to perform this self-check at least once every year.”
If you want to check your credit report for free, you can get a full copy of your report from any of the three major credit reporting agencies or you can get your Credit Report Card, a free tool that provides your credit score and a summary of your credit report.
Image: Iragerich, via Flickr