For the first time ever, debt collection and credit reporting agencies will be subject to federal supervision by a single regulator. Other credit reporting news includes an increase in allowable charges for extra consumer credit reports, a study revealing potential differences between credit scores sold to consumers and lenders and a federal testimony on the importance of credit oversight. Meanwhile, several companies are providing a tidal wave of new and expanded services to help navigate through these definitive, regulated financial market waters.
The Consumer Financial Protection Agency announced a proposal to add debt collection and consumer reporting agencies to its nonbank supervision program in a statement earlier this year. The proposal would affect larger participants in these markets. More specifically, debt collectors with collection activities totaling over $10 million in annual receipts and consumer reporting agencies with reporting activities totaling over $7 million in annual receipts would be subject to federal monitoring.
“This is the CFPB’s first in a series of rulemakings to define larger participants,” the announcement stated. “The CFPB chose annual receipts as the criterion for both debt collection and consumer reporting because it approximates market participation in these two markets.”
In a July 16 news release, the CFPB announced it adopted the proposal, effective Sept. 30, to include the larger credit reporting agencies as part of the nonbank supervision program. Finalization for the program to include the larger debt collection agencies are expected this fall.
On April 3, a CFPB notice allowed credit reporting agencies to raise fees from $11.00 to $11.50 for an extra copy of a consumer-ordered credit report. The Consumer Price Index, which dictates the rate changes, revealed a 40.75 percent increase for all urban customers and items between September 1997 and September 2011 based on index values from the same time span.
According to a Sept. 25 report, the CFPB urged consumers to shop around for credit, check their credit report for accuracy and dispute any errors. These recommendations resulted from the CFPB’s study that compared credit scores sold to creditors and consumers by nationwide credit reporting agencies.
“The study found that about one out of five consumers would likely receive a meaningfully different score than would a lender,” the report said. “A meaningful difference means the consumer would be likely to qualify for different credit offers — either better or worse — than they would expect to get based on the score they purchased.”
In testimony before the House Committee on Financial Service’s Subcommittee on Financial Institutions and Consumer Credit, the Federal Trade Commission said enforcing the Fair Credit Reporting Act remains its top priority. The agency said, in last month’s media release, it was committed to consumer and business education in the arenas of consumer reports, credit scores and each sector’s duties under the FCRA.
The FTC also discussed its consent orders against Spokeo Inc., and HireRight Solutions Inc., two companies that allegedly violated the FCRA and were ordered to pay civil penalties. As well, the FTC discussed consumers with limited or no credit history and the difficulties their histories presented in terms of being evaluated for credit purposes. Finally, the FTC discussed medical debt and its impact on consumer reports and credit scoring models.
Credit Plus Inc. recently revealed a new mobile app, an enhanced product feature and a new mortgage fraud prevention tool. The nEXT Generation Credit App will help mortgage professionals access consumer credit data on their iPhones or other mobile devices.
On the same date, Credit Plus announced its enhanced Score Plus program that allows customers the access to real-time updates while waiting for a credit rescore. For those in need of a new mortgage fraud prevention tool, Credit Plus can provide its undisclosed debt monitoring powered by Equifax. Pipeline protection is a major benefit of the program, the July 31 announcement said.
For MarksmanLMP users, Mortech Inc. announced, on March 26, the addition of its credit reporting engine. With this feature, MarksmanLMP clients can pull a full credit report without having to leave their lending management platform.
FICO and CoreLogic jointly introduced a new predictive credit score to help lenders safely grow mortgage origination volumes, according to a July 10 statement. The new FICO Mortgage Score, powered by CoreLogic, promises to give mortgage lenders a more accurate picture of a consumer’s credit risk in terms of loan prequalification and origination by evaluating traditional credit information from national repositories with CoreLogic’s supplemental consumer credit details.
SharperLending LLC announced on April 11 a partnership with Suntell to deliver credit bureau information in an effort to strengthen lender risk objectives. Under this partnership, SharperLending will use its credit reporting technology to deliver its secure data to Suntell’s Square 1 Credit Suite. Suntell’s real-time access to SharperLending’s service offerings includes consumer credit bureau information from the three credit repositories.
In final news, VantageScore Solutions LLC announced on Jul. 16, its “Preferred Partner” status with the National Association of Federal Credit Unions Services Corporation. As a preferred partner, VantageScore will provide NAFCU members and other credit unions with white papers and educational material related to credit scoring. VantageScore’s President and Chief Executive Officer Barrett Burns said the partnership allows credit unions access to a highly predictive credit scoring model for a broader population while providing scores that are more consistent throughout the three credit reporting agencies.
“Robust underwriting is critical to the credit-granting arms of our nation’s credit unions,” Burns said. “So, I am delighted that VantageScore Solutions has been named a NAFCU Services Preferred Partner.”
