Investor’s Business Daily lambasted claims made by Richard Cordray, the head of the Consumer Financial Protection Bureau (CFPB), at a Detroit credit reporting hearing. Cordray claimed that ‘inaccurate’ credit reports and scores may be ‘unfairly blocking’ some people from obtaining credit. A community organizer at the hearing claimed as much as 40% of reports may be inaccurate. Cordray stated that he has the power to unleash examiners on credit bureaus and to rewrite the rules for collecting, maintaining and analyzing consumer credit data.
Such statements are clearly erroneous because previous studies by independent organizations have found that U.S. credit reports are highly accurate. For instance the US based Policy and Economic Research Council (PERC) found that only 0.5% of the data collected and maintained by the Big Three reporting agencies, Equifax, Experian and TransUnion contained material errors that adversely affected consumers’ credit scores. The study, which oversampled blacks and Latinos, found no higher rates of error between the aggregate data and the data by race.
The research clearly indicates that the concerns of the CFPB are unfounded. It is therefore inconceivable as to why Cordray wants to rewrite the rules for consumer credit reporting. Obviously Mr. Cordray appears to be misinformed and needs to be told that the consumer credit reporting system in the US is not broken and therefore does not need fixing!
Source: Investor’s Business Daily
BIIA Comment: Perhaps the CFPB is unaware that the World Bank has released in September 2011 its ‘General Principles for Credit Reporting’ Much of what is contained in the document comes from best demonstrated practices in consumer credit reporting including the US.