Rep. Tlaib introduces bill to correct credit history for victims of predatory lending, fraud, economic abuse

WASHINGTON – Today, U.S. Rep. Rashida Tlaib (MI-12) introduced the Fostering Accuracy and Integrity in the Reporting of Credit Act to restore credit for victims of predatory lending, fraud and financial abuse. The FAIR Credit Act also addresses inaccuracies in credit reports found by over a third of consumers, according to Consumer Reports.

“This is an economic justice bill. We know that credit reports are wreaked by errors, and create barricades to obtain housing, employment, and transportation,” said Rep. Tlaib. “Our neighbors are constantly targeted by predatory lenders and scams, forced to take on burdensome medical debt, or survived domestic and financial abuse. Adverse credit reports should not drag them down. This bill is about opportunity and justice for Americans denied access to basic needs.”

Credit and consumer-related fraud, deception, and exploitation negatively impacts someone’s ability to pay bills, receive a loan, secure a mortgage, or obtain a credit card. Similarly, consumers’ credit scores are reduced by medical debt, even though medical services are often involuntary and difficult to know the cost of in advance.

The FAIR Credit Act:

• Reduces the duration that most adverse information stays on a credit report from seven to four years.
• Prohibits medical debt from being included on credit reports or consumer reports.
• Requires credit reporting agencies to remove negative information resulting from predatory loans and fraudulent activity.
• Gives survivors of domestic and other economic abuse a pathway to get negative information resulting from abuse removed from their credit reports.
• Establishes the right to free credit monitoring and identity theft protection services for certain consumers, including victims of fraud, active-duty military, and those 65 years of age and older.

The FAIR Credit Act is endorsed by the National Consumer Law Center on behalf of its low-income clients, Americans for Financial Reform, Center for Responsible Lending, Consumer Action, Consumer Federation of America, Detroit Justice Center and Dēmos.

“We thank Congresswoman Tlaib for her leadership in protecting the credit records of consumers unfairly tarnished by predatory mortgages, harmful private student loans, and debt resulting from domestic abuse,” said Chi Chi Wu, Director of Consumer Reporting and Data Advocacy at the National Consumer Law Center. “Most importantly, this bill flat out bans the reporting of medical debt and reduces the harm of negative credit reporting generally by giving consumers a fresh start more quickly.”

“Credit reporting agencies have an obligation to verify the accuracy of what they report and promptly correct reports when they have false or out-of-date information. Failing to do so has tragic consequences when people attempt to secure housing, find employment, or access safe credit,” said Adam Rust, Director of Financial Services for the Consumer Federation of America. “When people cannot repay debt because of illness, predatory for-profit college tuition, a stolen identity, or debts run up by an abusive partner, it’s bad policy to let credit reports ignore real-world factors that drive these outcomes. Congress should pass the FAIR Credit Act to ensure credit reports won’t punish people for circumstances beyond their control.”

“At the Detroit Justice Center, we see every day how credit reports create additional challenges for returning citizens. When it comes to securing a job, shelter, or a loan, a credit report can be just as much of a barrier to rebuilding a life as a criminal record,” said Eric Williams, Legal Director at the Detroit Justice Center. “The FAIR Credit Act changes that by capping how long conviction records can appear on a credit report at seven years, the same kind of sunset that several states have already adopted. Pairing that with the bill’s protections against predatory debt collection and medical debt reporting gives returning citizens a fairer shot at securing housing, credit, and employment as they rebuild. We support this legislation because building economic equity has to include people returning home from incarceration.”

The FAIR Credit Act is cosponsored by U.S. Reps. Eleanor Holmes Norton (DC) and Melanie Stansbury (NM-01).

Read the full text of the bill.

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