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Overhauling the credit reporting system

Errors on your credit report can have a devastating effect on your life. They not only affect your ability to get a credit card, a loan or a mortgage, but they can also affect your ability to rent property, go to college and get a job. Disputing these errors, and getting your credit repaired, can be a daunting task.

Congresswoman Maxine Waters hopes to change that by introducing the Comprehensive Consumer Credit Reporting Reform Act of 2016. The bill aims to protect consumers from incorrect information and outdated debt listed on their credit reports by shortening the time period that adverse credit information stays on a report from seven to four years, making credit reports more accessible to consumers, and giving the Consumer Financial Protection Bureau broad oversight authority to monitor credit scoring practices.

The bill also proposes:

  • Restricting the use of credit checks for employment decisions.
  • Giving private education loan borrowers the same right to repair their credit as federal student loan borrowers.
  • Providing relief to borrowers victimized by predatory mortgage lenders by removing adverse information about loans that resulted from unfair, deceptive or abusive practices.
  • Creating a new consumer right to appeal reviews by credit reporting agencies and the furnishers of initial disputes.
  • Requiring credit reporting agencies to establish dedicated “dispute” pages on their websites that are free of marketing materials.
  • Requiring the removal of paid and settled debts from credit reports within 45 days.
  • Shifting the burden of proving the accuracy and completeness of information contained on a credit report from the consumer to credit reporting agencies and creditors.

Waters hopes the legislation will help “overhaul the American credit reporting system so that it is fairer, more accurate, and less confusing for consumers.” Because the bill still needs to make its way through Congress, however, there is no guarantee these proposed changes will be implemented.

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