Your credit score is no doubt important to you. It can determine loan eligibility, job qualification, whether a landlord will rent to you and even security clearance eligibility for military members. So making sure your credit score and reports are accurate is also important.
For this reason, the Consumer Financial Protection Bureau (CFPB) will begin to supervise credit firms as soon as September 30 according to a news release Monday. This marks the first time the federal government will monitor these credit companies, which include the 30 biggest industry firms and names such as Equifax, Experian and TransUnion, according to a recent Associated Press story. These three largest credit bureaus produce more than 3 billion consumer reports per year and serve more than 200 million Americans.
“The CFPB has a mandate to study, make recommendations, promulgate regulations and engage in enforcement activities, where appropriate, regarding the transparency and fairness of consumer-related products and services for financial services sector, as well as certain designated non-banking industries,” Adam Levin, Chairman and Co-Founder of Credit.com, said. “The credit reporting industry is part of that mandate.”
This mandate stems from the Dodd-Frank Wall Street Reform and Consumer Protection Act, which allows the CFPB to oversee non-banks related to residential mortgage, payday and private education lending, as well as larger non-bank companies for other markets. Now, the CFPB will be able to amend rules and crack down on discrepancies. The CFPB’s supervision will include procedure reviews, on-site examinations and talking to appropriate personnel.
According to Credit Karma, CFPB Director Richard Cordray conveyed his goals Monday as making sure the information creditors are receiving from credit bureaus is trustworthy, gathering and maintaining credit report information from the companies and thoroughly examining the process consumers are subjected to in order to debate any report errors.
This new rule will impact most American consumers in different ways. Whether you’re applying for a new credit card, a car loan or a home mortgage, you want the information produced by credit firms to be correct. And that is what the CFPB is setting out to ensure. To put things in perspective, all the U.S. consumer reporting firms total more than $4 billion in yearly receipts according to the CFPB. An amount of money this large should certainly reflect accurate reports.
“While consumers are still required to self-police their own credit files, the new Consumer Financial Protection Bureau provides the enforcement that the American public desperately needs,” Marco Carbajo, Founder of BusinessCreditBlogger.com, said. “As a result, credit companies will be more responsive and transparent in their practices which benefits every American consumer.”
The Consumer Financial Protection Bureau’s new regulation will also benefit members of the military who tend to own more credit cards than civilians and who are more likely to accrue interest rate fees or be in credit card debt, according to the 2010 FINRA National Financial Capability Study. All things considered, the CFPB’s newly-minted oversight of credit companies will favorably affect the American public.
“People may not always like what’s in their credit report, but they want them to be accurate, and they want mistakes corrected quickly — and that’s entirely reasonable,” Levin said. “That’s really what the CFPB’s mission here is about.”
Photo courtesy of TrinityCreditServices