Credit reporting was the first industry targeted by the CFPB using its “larger participant” supervisory authority. As demonstrated by the CFPB’s actions last week, credit reporting continues to be a high CFPB priority and is likely to remain as such for the foreseeable future.
On February 27, CFPB Director Richard Cordray delivered remarks before a meeting of the CFPB’s Consumer Advisory Board. Mr. Cordray noted that the CFPB has issued a report providing a “Credit reporting complaint snapshot” showing that 11% of the total consumer complaints handled by the CFPB so far have been related to credit reporting.
Referring to the number of consumer complaints and the role that credit information plays in consumers’ lives, Mr. Cordray stated that the CFPB has a “critical responsibility” to make sure that credit information is timely and accurate. Not only did Mr. Cordray discuss “the progress we are making to help ensure that people are being treated fairly in the credit reporting market,” but he also emphasized that the CFPB is looking at “where we think more could be done.”
Director Cordray described his recent outreach to credit card companies, calling for such companies to play a larger role in educating consumers by making consumers’ credit scores and related content freely available to their customers. While acknowledging that they are not legally required to do so, Mr. Cordray indicated that the CFPB would consider the provision of free credit scores by credit card companies to be a “best practice” and one that he would like to see extended to other product lines. According to Mr. Cordray, providing free credit scores can “yield positive returns that outweigh the limited effort involved,” because educated consumers are less likely to default and more likely to participate in the national credit economy. The text of his letter to the credit card companies is available here.
Mr. Cordray also referenced the CFPB’s bulletin to companies that furnish information to consumer reporting agencies about their duty to investigate disputes. For more on the bulletin, see our blog post here.
The CFPB has indicated that its actions are motivated by its desire for both lenders and consumers to participate more fully in the credit reporting process so that the most timely and accurate information is available to make credit determinations, something the CFPB believes will result in benefits for the overall economy.