Sen. Bernie Sanders (I-Vt.) today introduced legislation that would provide consumers free access to error-riddled credit scores that banks use to decide who gets loans and how much interest to charge.
Rep. Steve Cohen (D-Tenn.) introduced a companion bill in the House to protect consumers by giving them access to the same credit information that banks see when considering loan applications.
The legislation was introduced during National Consumer Credit Week.
A Federal Trade Commission study released last month found errors in one out of four credit reports by Equifax, Experian and TransUnion, the three major agencies in the United States. According to the study, 5 percent of the consumers spotted errors in their reports that could cost them more for mortgages or car loans.
In addition to requiring once-a-year free access to credit scores, the legislation would help ensure that credit scores are accurate and crack down on deceptive marketing practices that lure consumers into buying unreliable or unnecessary credit monitoring services.
Sanders said, "A credit score affects consumers' ability to finance important purchases like homes and cars, but many Americans may not be fully aware of the significance of their credit score or know what they can do to correct serious errors. The bottom line is that everyone applying for a loan should be able to see the same information that banks rely on to judge whether a consumer is creditworthy."
Cohen added, "A good credit score means better interest rates on mortgages, bank loans and credit cards, smaller deposits for rent or utilities and even lower insurance premiums. Our bill would require that a consumer's credit score be included with their annual free credit report."
The Senate version of the Fair Access to Credit Scores Act is co-sponsored by Sens. Dianne Feinstein (D-Calif.), Barbara Boxer (D-Calif.), Frank Lautenberg (D-N.J.) and Robert Menendez (D-N.J.). House cosponsors include Reps. Eleanor Holmes Norton (D-D.C.), Albio Sires (D-N.J.), Marcy Kaptur (D-Ohio), John Conyers (D-Mich.), Raul Grijalva (D-Ariz.) and William Lacy Clay (D-Mo.). The bill also has support from Consumers Union, U.S. PIRG, the National Consumers Law Center and National Association of Consumer Advocates on behalf of its low-income clients.
Monitoring credit scores can be difficult and expensive. One credit agency, for example, charges individuals $15.95 to see their report. Some consumers say they have been tricked into buying inaccurate credit scores from competing credit agencies and there have been complaints about misleading promises of "free" credit score that end up costing consumers up to $200 per year.
Consumers who are turned down for credit or who were charged higher interest because of an unfavorable report are entitled to a free copy of their credit score under a provision in the 2010 Wall Street Reform and Consumer Protection Act. The bills by Sanders and Cohen would expand access by providing all consumers with an annual credit score. Their legislation also would strengthen consumers' rights to sue credit reporting agencies over inaccurate information.
To read the bill, click here.
For a fact sheet on the bill, click here.