As consumer advocates call on policymakers to change the credit reporting system, credit union trade groups are warning that adjustments could hamper efforts to assist their members.
Consumer advocates contend that changes are needed. “The level of errors in credit reports and volume of complaints is unacceptable for an industry so important to the financial lives of Americans,” Chi Chi Wu, a staff attorney with the National Consumer Law Center, wrote in testimony prepared for the House Financial Services Committee’s Oversight and Investigations Subcommittee hearing.
In her testimony, Wu called on Congress to establish a public credit registry. “While public agencies are far from perfect, at least they would not have profit-making as their top priority,” she added.
In a letter to the subcommittee, Credit Union National Association President/CEO Jim Nussle cautioned lawmakers about certain adjustments to the credit reporting system.
“Attempts to remove or modify certain types of debt from the credit reporting system will do long-term damage to lending and the ability of borrowers to get the loans they need to buy a home, start a small business, or achieve a higher education,” he wrote.
He said the removal of one type of debt could set a precedent that would lead to the deletion of other types of debt. “This is the start of a slippery slope that could fundamentally damage credit underwriting, making it harder for lenders to make safe and sound credit decisions,” he wrote.
Brad Thaler, vice president of legislative affairs at the National Association of Federally-Insured Credit Unions, cautioned the subcommittee against adopting a proposal that would require the furnishers of information, such as credit unions, to review and consider new or additional information each time a consumer disputes the accuracy of information.
“We have some concerns that this could result in predatory credit repair companies continually disputing accurate information, at great cost to financial institutions and consumers,” he wrote in a letter to the panel. He added that proposals that would expand consumers’ private rights of action could result in a drastic increase in frivolous lawsuits.