House lawmakers held a hearing on the credit reporting system on Tuesday, in which an expert highlighted the reasons the industry failed to put consumers first.
Syed Ejaz, financial policy analyst for Consumer Reports, said in testimony to lawmakers at the United States House Committee on Financial Services that the current credit reporting system does not work for American consumers and may limit their financial opportunities.
âConsumers need a credit reporting system that works for them – a system where their reports are accessible and accurate and where errors are easy to correct,â Ejaz said.
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Ejaz noted that complaints to the Consumer Financial Protection Bureau about credit report errors have doubled since 2019 and are among the most frequently cited concerns.
In a survey conducted by Consumer Reports earlier this year, 34% of 6,000 people surveyed said they found at least one mistake after checking their credit report.
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“This is unacceptable. Credit bureaus hold information that can be used to make meaningful loan, employment and underwriting decisions about us,” Ejaz said in prepared remarks. âCredit report errors that damage credit scores can prevent people from getting affordable interest rates, as well as affordable jobs and, in some states, homeowners and auto insurance. “
Consumers may also have difficulty getting reports corrected, and some have said they even have difficulty accessing their own information.
Ejaz called on Congress to pass the Comprehensive Credit Act and the Protect Your Credit Score Act, two laws designed to ensure consumer reporting agencies report fair and accurate information.
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The three largest credit reporting agencies in the United States are Equifax, TransUnion, and Experian. Many lenders examine consumer credit reports to determine whether to grant – and on what terms – credit.
The average credit score in 2020 reached 711, up from 703 the year before, according to Experian.