thehill.com/opinion/finance/529675-after-5-decades-of-private-credit-reporting-its-time-for-a-change?rnd=1607626407
After 5 decades of private credit reporting, it's time for a change | The Hill
Amy Traub and Chi Chi Wu, Opinion Contributors
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Credit reports contain far too many errors for something so vital to our economic well-being, with one in five consumers having an error, and one in 20 having a serious error that would affect their ability to obtain credit or its pricing. Consumers are frustrated by the Kafka-esque system devised by the credit bureaus to process disputes, which often blocks them from getting relief. Credit reports and scores are used for inappropriate purposes, such as employment, insurance, and even immigration (their use is required as part of the Public Charge Rule.) Most critically, credit scores reflect and perpetuate thorny racial disparities, playing a role in financially entrenching America’s original sin.
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Many of the problems with credit reporting stem from its very nature. An oligopoly of three private companies governs our financial reputations, trading in and profiting from our data. We are captives because we cannot opt out of the system. Instead, creditors and other companies are the credit bureaus’ customers and constituency. There’s not much incentive for credit bureaus to create a system that works better for consumers, including disadvantaged communities. We can see the upshot of this dysfunction where credit reporting issues are often the number one source of complaints to the Consumer Financial Protection Bureau, including during this pandemic.
But there is a way forward. Among President-elect Biden’s economic proposals is an innovative plan to establish a public credit reporting agency, based on policy developed by Demos. This solution recognizes that access to consumer credit is a public good and would promote that public good by establishing a public institution to replace the private companies that now control credit reporting. A public credit reporting agency or registry would also be an effective way to build economic power for Black and Brown households by putting equity at the center of its decisionmaking and enabling them to exercise greater control over their economic lives. . . .
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