RICHMOND, VA (WWBT) - Changes are coming for credit reporting agencies. For the first time, they will be supervised on the Federal level by the Consumer Financial Protection Bureau.
We all know about the big three credit reporting agencies, TransUnion, Equifax and Experian but what you many not know is that there is no federal oversight. That is about to change, the CFPB will soon play big brother and supervise credit agencies.
David Holt, with Clear Point Credit Counseling Solutions says it's a good move. "This is a big deal for consumers," he says. The goal is to ensure credit reporting agencies are working properly for consumers, lenders and the economy. "The laws are already there in the Fair Credit Reporting Act but they are going to make up the rules on what the agencies have to do," Holt says.
On its website, the CFPB provides a fact sheet and other links to help explain the changes and the importance of the new regulation. Holt says consumers will not see any immediate changes. "So they are in the process of developing their rules and their process now, so we are not sure exactly what is going to look like but ultimately, for the consumer, it is going to mean greater accuracy in their reports," Holt told us.
Credit reporting agencies are key to the country's lending system. Credit experts say what shows up in the report has a major impact on consumers. "Big time. They will dictate whether you get a loan or not. Banks, credit unions, other financial institutions use them all the time to determine number one, whether you are going to get the loan, number two, what the interest rate is going to be," Holt says.
Clear Point says the new regulations are not an indicator that the credit agencies were acting inappropriately. Bottom line, there were rules but no agency to enforce them. While this is good news for the consumer, Holt says keep in mind there are two sides to the changes.
"That can cut both ways. If you have bad credit, it is going to be accurate, if you have good credit, it is going to be accurate. So overall, it is an accuracy thing more than it is a good, bad or indifferent situation," Holt says.
The new supervision goes into effect in September. Credit counselors say inaccuracies on credit reports continue to be a problem. Experts recommend reviewing your credit report at least once year for free at Annual Credit Report.com.