July 29, 2021

Federal credit reporting agency unlikely, AFSA says

The push for a single federal credit reporting agency would be futile, according to an executive at the American Financial Services Association.

The logistical and financial challenges of the Consumer Financial Protection Bureau launching and maintaining such an agency would be unrealistic, said Celia Winslow, AFSA senior vice president.

Proponents of a single national agency believe the methods used by the three credit bureaus — Experian, Equifax and TransUnion — to collect consumer data and create scores harm consumers.

“The best credit reporting agencies in the world are in the United States. But nonetheless, there’s been this look at the problems with our system, and the thought is, if the CFPB did its own database, that would fix it,” Winslow said.

“The CFPB, even with all its resources, it’s still limited in what it can do.”

Credit scores remain the primary system to determine if a consumer is capable of repaying an auto loan, though many companies have pushed to explore alternative credit-scoring processes. The core credit bureaus, as well, have worked to add alternative data — which includes utility bills and even checking account information — to weigh a person’s creditworthiness.

Though a federally run credit-scoring agency is unlikely, the desire for greater transparency in how scores are created and maintained remains.