Reforming credit reports

July 29, 1992

As anyone who has ever been turned down for a credit card, car loan or mortgage because of a faulty credit report can attest, getting such errors corrected is often a tedious, frustrating experience. Even relatively minor mistakes can result in major delays and inconvenience; at worst, people's lives and reputations have been ruined because credit bureaus have passed on inaccurate or incomplete information about their credit histories.

The problem affects millions of consumers. A 1991 study by the Consumers Union found nearly 50 percent of the credit reports contained at least one inaccuracy, and a fifth had an error serious enough to damage the applicant's creditworthiness. Yet a study by the U.S. Public Interest Research Group found that consumers had to wait an average of five months before the credit companies corrected such errors.

Now Congress is considering legislation that would give consumers greater access to their credit files and allow them to get errors corrected promptly, permanently and with a minimum of red tape. The House bill, to be voted on within the next two weeks, would require credit bureaus to give consumers a free copy of reports used to deny them credit and provide 800 telephone numbers for consumers to find out the content of their files. It would also require that any disputed information in the file not verified within 30 days be deleted.

Such reforms are badly needed to prevent abuses by the handful of companies that dominate credit reporting. Yet opponents of the measure are trying to kill it by adding an amendment that would pre-empt state consumer protection laws if the state laws were in any way stronger than the federal statute. Maryland, for example, recently passed a law giving consumers the right to a free annual copy of their credit report from each major credit bureau -- a provision that would be invalid under the proposed amendment.

The only conceivable purpose of such tinkering is to weaken support for reforms. Congress shouldn't fall for it. The aim of a federal law ought to be national minimum reporting standards, not to hamstring states that wish to provide additional protection for consumers. The legislation is sound as presently written; lawmakers should reject any attempt to water it down.

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