The Consumer Financial Protection Bureau (CFPB) has announced its decision to regulate credit-reporting agencies.
The agencies will soon undergo inspection and regulation to ensure the legality of their practices – a change that will hopefully turn credit reports from a bain to a genuinely useful piece of information for consumers and landlords.
Until now, it has been fairly difficult for lawmakers to enforce the Fair Credit Reporting Act (FCRA). The Federal Trade Commission had to file a lawsuit against credit-reporting agencies if the companies committed a breach of the FCRA. Now, however, the CFPB is capable of forcing credit-reporting agencies to follow the rules without taking such a drastic step.
The CFPB's close surveillance of credit-reporting agencies will mean that the agencies will produce more accurate credit reports. Landlords and rental property management officials are familiar with the importance of credit report checks when taking on new tenants. Previously, though, it was difficult to be sure that the reports gave a fair and accurate view of a tenant's credit history.
Even a small error on the part of the credit-reporting agency – for instance, confusing one consumer's identity with another of the same name – could mean the difference between a great credit rating and a terrible one. The CFPB is hoping to lessen the volume of such mistakes, and thus lend credibility and usefulness to consumer credit reports.