WASHINGTON (7/17/12)--The Consumer Financial Protection Bureau (CFPB) this fall will begin supervision and examination of consumer credit reporting agencies with more than $7 million in annual receipts, the agency announced on Monday.
The agency said its examination authority will cover about 30 firms that account for 94% of total credit report industry receipts. There are around 400 firms in the $4 billion consumer credit reporting market, according to CFPB estimates. The three largest credit reporting agencies produce more than three billion consumer credit reports each year, and maintain credit records on more than 200 million Americans, the CFPB said.
Speaking at a Monday field hearing in Detroit, Mich., CFPB Director Richard Cordray said dispute resolution and credit report accuracy would be two areas of emphasis for the agency. Inaccurate credit reports deprive lenders of the information needed to properly assess credit risk, and can also cause borrowers to be wrongly denied loans, charged higher interest rates, or passed over for jobs, he added.
Cordray said the agency also would work with credit reporting agencies to improve the accuracy of credit report information. The credit report dispute resolution process can be "unreasonably laborious" for consumers, he added, noting that credit reporting agencies can be slow to report the results of investigations to those consumers.
Audience members suggested the CFPB could also examine credit repair firms.
The consumer credit report rule is the first of many CFPB rules that would define "larger participants" in nonbank markets. Under the supervisory program, the CFPB will examine credit reporting bureaus for federal consumer financial law compliance and assess whether risks to consumers exist. The CFPB also will have the right to take enforcement actions.
The supervisory program will begin after Sept. 30, the agency said.
Consumer education will also be a component of the CFPB's credit reporting work. The agency Monday released a consumer advisory on credit reports and a question and answer document as part of that education initiative.
The CFPB advisory highlights what consumers should look for in their credit reports and how to correct any mistakes. Tips on how to monitor credit and avoid identity theft are also included.
Michigan Credit Union League President/CEO Dave Adams and representatives from Michigan credit unions later met with Cordray and other CFPB staff. The credit unions included:
- Christian Financial CU, Roseville;
- Michigan First CU, Lathrup Village;
- Dort FCU, Flint;
- Omni Community CU, Battle Creek;
- Lake Trust CU, Lansing;
- Genisys CU. Auburn Hills;
- University of Michigan CU, Ann Arbor; and
- Co-op Services CU, Dearborn.