Hello, LOs!
Last week I asked for your thoughts on the federal government potentially changing the existing credit reporting standard. I had so many great responses – and, to be frank, some that were disappointing – I wanted to share a couple with you all.
"Personally, I think if you make the credit reporting agencies liable for misreporting, that will go a long way towards fixing the problem," said one LO in the Midwest. "Currently, there is no way for an individual to go after the firms for incorrect information or questions on the score. Make them write a check, not just give free credit reporting services for a year, it costs them nothing to do that. There are plenty of models available to demonstrate the true economic cost of bad credit or credit mistakes for an individual. It is not just the one event, but takes years to recover."
A Virginia-based LO wrote that she thinks utilities should not be able to throw collections on consumers, and judgments should be required.
"If the fee to report them is a problem for municipalities, then pass that fee to the creditor who is filing the Judgement WHEN they file the claim.
I am not confident the Federal Government will do a better job than the private sector. I [think] the private sector needs to be held accountable better. If this is rolled up to a Fed agency, oversight is nearly impossible. Enforce the laws that [are] in place, scrub data to illuminate 'offenders' of unfair practices (utilities and medical collections), and require judgments be reported. Creating a new government entity to manage this is NOT the solution I would choose."
The head of a mortgage brokerage in Florida agreed that government taking over credit reporting "is the last thing we want."
"That said, credit reporting is frustratingly unresponsive to consumers. If you can find your way through the maze of voicemails, you will find that the bureaus simply send your request back to the creditor who can simply say, 'We think what we reported is accurate.' They do not produce contracts or other documentation that supports their claims, nor do they have to. The repositories should require that creditors produce substantive proof of the validity of their reporting or remove it.
While scores are somewhat valuable, they are hardly iron-clad. More than once, I have seen a medical collection for $50 pop up and drop the borrower's score 100 points. To compound matters, collection agencies have learned to manipulate how the automated underwriting systems score collections to force borrowers to pay them, whether or not they have merit. We can do better. Perhaps the new administration will write new rules to make credit reporting a little less one-sided."
One mortgage pro says a huge reform would be stopping the three credit rating agencies from selling the credit info to trigger lead companies.
"This is a big nuisance in the mortgage world," he said. "Having your email, cell phone and home phone blowing up with calls within minutes of having your credit report run. All the sales calls are completely misleading and outright lies. Seems like it's an invasion of privacy."
Thanks again for all those who responded!
James Kleimann
Managing Editor, HousingWire
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