National Consumer Credit Reporting System Improvement Act of 2003

NATIONAL CONSUMER CREDIT REPORTING SYSTEM IMPROVEMENT ACT OF 2003

Mr. SCHUMER. I commend Senators SHELBY and SARBANES on a strong, bipartisan bill.

Reauthorizing the Fair Credit Reporting Act is vital to our national credit markets, to the broad credit access American consumers enjoy, and to the businesses that provide that credit. Indeed, it may be the most important piece of legislation that we enact in 2003.

Like all great pieces of legislation, this bill strikes a balance between those who would like to see more change and those who would like to see less. It is a true compromise between competing interests.

While preserving some of the structure of how businesses operate, it adds significant new consumer protections and disclosure rights-enhanced protection from identity theft, distribution of free credit reports annually, better notice when adverse actions are taken.

I want to speak for a minute about identity theft.

While our national credit system-and the digital age we now live in-has brought great benefits, it also has a dark underside: identity theft.

It is now so easy for credit histories to be accessed, that the security of some of our most private data is easily compromised. As a result, becoming a victim of identity theft is as easy as saying your ABCs.

So what is identity theft? It sounds like something out of an Isaac Asimov science fiction novel but it is a very real crime that could affect all of us. Anyone who has ever applied for a credit card, a driver's license, a social security number, even a cell phone, could become a victim.

Last year, the Federal Trade Commission received twice as many complaints about identity theft as it did in 2001. And ID theft is projected to grow in the future. Some forecasts predict that by 2006, between 500,000 and 700,000 Americans will be victimized annually.

This issue is of particular concern to New York State. New York has the second highest number of cases of ID theft of any state in the county. And my hometown, New York City, has the unfortunate distinction of being the identity theft capital of the United States-it suffers more identity theft than any other city in the nation. New York businesses also suffer as the financial costs of identity theft nationwide often fall on the financial institutions based in New York. ID theft costs businesses millions of dollars each year because criminals use false pretenses to purchase goods, leaving businesses to foot the bill. Identity theft is a scourge on New York consumers and New York businesses. And it is high time we fixed this problem.

Victims of identity theft often spend hundreds if not thousands of dollars and years repairing their financial lives. But there is more at stake here than just money. By destroying a person's credit rating, identity theft jeopardizes an honest person's ability to get a credit card, receive approval for a loan, get a job, or even buy a house.

Identity theft doesn't just mean having to replace an ATM card, it means having to rebuild a life.

So I am glad we are addressing ID theft in a strong manner in this bill and commend my colleagues for their leadership on this issue.

I also want to speak about another critical part of the bill-improving consumer access to their credit scores, the principle factor in determining a person's credit worthiness and the loan terms they receive. For years, consumers have been kept in the dark about what their credit score is and how it is computed. At long last, this legislation lifts the veil of secrecy over credit scores and creates greater opportunity for securing a home mortgage at considerably less expense.

The legislation that Senator ALLARD and I worked on with our Chairman and ranking member will finally put an end to this practice by ensuring that consumers have access to their credit score. This will level the information playing field between consumers and lenders.

Specifically, S. 1753 would require credit bureaus to disclose a consumer's credit score upon application for a mortgage. The bill also would require any bank using a credit score to service a mortgage to provide the borrower with the information used to create this credit score. And the credit score, whether obtained from a credit bureau, generated internally by the lender, or created by a third party, would have to be accompanied by a description of credit scores and the data used to generate them. This will go a long way toward demystifying credit scores for consumers. I think it is a real victory for consumers. And, again, I am proud to have worked with my colleague Senator ALLARD on this section of the bill.

So in conclusion let me say that I think the bill maintains the key foundation of the national credit system which has served consumers and the country so well-the ability to get instant credit, to get world class customer service, and to get some of the lowest credit rates in the world. And it enhances some of the new rights consumers need in this digital age we now live in.