Credit Reporting

Position

• ICBA supports the use of consumer credit reports and credit scoring models as tools to objectively assess a borrower’s creditworthiness and ability to repay a loan.
• ICBA opposes reforms to the credit reporting system that impose significant operational costs on community banks, potentially impacting the affordability of loans.
• ICBA opposes efforts that limit the value of credit scores, such as limiting accurate and legitimate negative information on credit reports.
• ICBA opposes changes to the Fair Credit Reporting Act’s dispute process that would make it easier for individuals to make fraudulent claims of inaccuracies, imposing an undue burden on community banks as furnishers of credit information.
• ICBA supports regulatory and legislative changes that would strictly limit Credit Reporting Agencies’ sale of “trigger leads” to make unsolicited calls and offers to consumers without their express consent and from unknown institutions, resulting in increased instances of fraud and general confusion for the consumer.

Background

Credit Reporting Agencies (CRAs) collect consumer data, such as names, addresses, social security numbers, credit histories, and public information, then compile that information into consumer credit reports. CRAs also use this information to develop proprietary credit scores or share that information with entities that develop credit score models, which indicate a consumer’s propensity to repay a loan.

A “trigger lead” is a marketing product that CRAs sell to third parties when a lender initiates a hard credit pull for a prospective mortgage applicant. Trigger leads are used to create competing offers for the future homebuyer. ICBA strongly supports legislation that would limit trigger lead solicitations exclusively to mortgage applicants who provide their consent or lenders that have previously originated a mortgage for the applicant, capturing refinance activity; lenders currently servicing the mortgage; or insured depository institutions that have a current account with the applicant.

The CFPB has finalized a rule that would eliminate the inclusion of medical debt in credit reports. The Bureau has also proposed a rule that would require any company that collects and sells consumer data to be covered by FCRA, potentially limiting the ability for third parties to buy trigger leads from CRAs.