NEW YORK (AP) — The companies that determine Americans’ credit scores are about to come under government oversight for the first time.
The Consumer Financial Protection Bureau said Monday that it will start supervising the 30 largest firms that make up 94 percent of the industry. That includes the three big credit reporting firms: Equifax Inc., Experian and TransUnion.
In remarks prepared for a speech Monday, Richard Cordray, the government agency’s director, said that scorekeeping by credit bureaus plays such a large role in Americans’ financial lives, it requires scrutiny.
The CFPB said its oversight may include on-sight examinations, and that it may require credit bureaus to file reports.
Cordray said the agency’s oversight will extend to niche companies that “focus on payday loans or checking accounts, as well as resellers of credit reports and those that analyze credit report information.”
The announcement wasn’t a total surprise, said Jon Ulzheimer, president of consumer education at SmartCredit.com and a former Equifax employee. He said the CFPB had hinted earlier this year that it was considering supervising the industry.
To Ulzheimer, the CFPB’s move implies that it will soon clarify what the Fair Credit Reporting Act requires of credit bureaus, a constant source of debate in the consumer credit world. When a person challenges what’s in their credit report, the Fair Credit Reporting Act requires the bureaus to investigate.
“But what exactly constitutes a reasonable investigation?” Ulzheimer asks. “The act doesn’t say.”
Each of the three biggest credit reporting agencies maintains files on more than 200 million Americans. These reports are filled with details on an individual’s payment history with credit cards, mortgages, auto loans and other borrowing, applications for credit, medical account information and other financial details. Past behavior, like late payments or carrying high balances on credit cards, is used to determine credit scores.
Lenders, like banks or auto finance companies, use credit scores to measure eligibility for mortgages, credit cards and a wide variety of other consumer loans. Low scores based on missed or late payments, for instance, can mean higher interest rates or rejected applications.
There have been thousands of complaints about the bureaus by consumers who claim they are unsuccessful getting credit reporting agencies to correct inaccurate information contained within credit reports.
The protection bureau will start regulating the industry after the new rule takes effect on Sept. 30.
More Related Stories
- Must-see morning clip: Barackalypse Now
- Okla. tornado survivor reunited with dog trapped in rubble live on camera
- Is Pope Francis an exorcist?
- Oklahoma tornado death count revised to 24
- Frantic parents search for children in tornado's wake
- Crews dig through rubble after deadly tornado
- 51 killed in massive Oklahoma tornado
- Don't cry climate-change wolf
- Record tornado devastates Oklahoma
- Limbaugh: No one willing to impeach the first black president
- Tornado reduces Oklahoma City suburb to rubble
- AP: Toll at least 37 dead in Okla. tornado
- Entire Midwest on tornado warning
- Oregon senator proposes appeal to Monsanto Protection Act
- Supreme Court to rule on prayer at government meetings
- Beltway scandal machine breaks, knows nothing about America
- Gitmo hunger striker launches Twitter campaign
- "Hero" cop, honored by Obama, accused of double rape
- Father of gay high school student arrested for dating classmate speaks out
- Pentagon adviser pushed Anthrax drug, which his firm produced
- Conservatives A-OK with closeted Boy Scouts
Featured Slide Shows
The week in 10 picsclose X
- 1 of 11
Lisa Montgomery embraces her nephew Thursday after a tornado tore apart her home in Cleburne, Texas. The twister killed six people and destroyed entire swaths of the North Texas town.
Credit: AP/LM Otero
Jack McMahon, the defense attorney for abortion doctor Kermit Gosnell, speaks outside the Criminal Justice Center in Philadelphia Tuesday. His client was convicted of killing three babies in his clinic, and will serve multiple life sentences.
Credit: AP/Matt Rourke
A photo taken Monday captures Vice President Joe Biden's response to a Milwaukee second-grader's innovative proposal to end America's epidemic of gun violence. This guy!
Credit: AP/Jenny Aicher
Sen. Rand Paul, R-Ky., flanked by a grouper-eyed Michele Bachmann, addresses the IRS' admission that it targeted Tea Party groups in advance of the 2012 election. In an op-ed for CNN Thursday, the Kentucky senator slammed the president for his faux outrage.
Credit: AP/Molly Riley
Ousted IRS chief Steven Miller is sworn in on Capitol Hill Friday. Miller testified before the House Ways and Means Committee on the extra scrutiny the agency gave conservative groups applying for tax-exempt status.
Credit: AP/J. Scott Applewhite
Attorney General Eric Holder pauses as he testifies on Capitol Hill before the House Judiciary Committee Wednesday. Holder is under fire, among other things, for the Justice Department's gathering of phone records at the Associated Press.
Credit: AP/Carolyn Kaster
O.J. Simpson sits during an evidentiary hearing at Clark County District Court in Las Vegas, Nev., Thursday. Simpson, who is currently serving a nine-to-33-year sentence in state prison for armed robbery and kidnapping, is using a writ of habeas corpus to seek a new trial.
Credit: AP/Las Vegas Review-Journal/Jeff Scheid
Major Tom to ground control: On Sunday astronaut Chris Hadfield recorded the first music video from space, a cover of David Bowie's "Space Oddity."
Credit: AP/NASA/Chris Hadfield
When it rains it pours. President Barack Obama speaks during a news conference Thursday with Turkish Prime Minister Recep Tayyip Erdogan, inexplicably inspiring an #umbrellagate Twitter meme.
Credit: AP/Jacquelyn Martin
A smoke plume rises high above a road block at the intersection of County A and Ross Road east of Solon Springs, Wis., Tuesday. No injuries were reported, but the the wildfire caused evacuations across northwestern Wisconsin.
Credit: AP/The Duluth News-Tribune/Clint Austin
Recent Slide Shows
- 1 of 11