What You Need to Know About the President’s Plans for Credit Reporting

 Posted on February 28,2021 in Creditor's Rights

You might not be aware of it, but one of President Biden’s campaign promises was to make credit reporting fairer and more accurate so that everyone across the country, no matter their race or socioeconomic status, can have more equal and much better opportunities to access credit cards, loans, mortgages, and other financial offerings. As a representative from an auto lender, equipment lender, truck lender, credit union, bank, or other financial institution, you might want to learn more about the possibilities that the Biden Administration is open to with regards to credit reporting reform. Here are some new ideas that you might see over the next four years. Keep them in mind during your dealings with debt collection activities, including bankruptcies. 

3 Potential Changes to Credit Reporting That You Should Know About

While there are many reforms the Biden Administration might consider in the future for credit scoring and reporting, these are some of the more substantial changes currently under consideration:

1. Centralization—There have been discussions of the federal government creating a credit registry to essentially assume all duties usually done by the three main credit reporting agencies (Experian, Equifax, and Transunion). While this might put the major agencies out of business, it would ensure a more regulated and fairer treatment of credit applicants across the board, especially if the new registry would include a more explicit system conducive to correctness and equality.

2. “The USPS of Credit Reporting”—Rather than completely replacing the three main agencies, some administration officials have discussed the idea of creating a federally owned and operated agency that would compete with the three main for-profit agencies. The goal? A more affordable, trustworthy, accurate, and fair option for creditors and debtors alike.

3. A Single Revised and Standardized Formula—No longer is there a standardized single formula to determine credit scores. These days, every agency has its own formula (or several formulas) to determine creditworthiness for all sorts of different forms of credit, be them auto loans, mortgages, or credit and loans. The Biden Administration is strongly considering standardizing this formula to include properly weighted inclusion of rent payments, utility payments, and other less conventional ways of determining a citizen’s trustworthiness as a borrower, which could help level the playing field.  

Contact a Chicago Bankruptcy Lawyer 

With a possible upheaval of the current credit scoring and reporting system in the works, you need to be prepared for it. Someday, maybe sooner than later, this system might change just enough to either make your job harder or easier. You need to stay up to date with such things, especially if defaults rise due to a volatile climate induced by these credit-reporting reforms. If you are in need of legal assistance regarding the latest trends in the financial industry to assist you in recovering debt, reach out to our knowledgeable Illinois debt collection attorneys. Contact the experienced team at Dimand Walinski Law Offices, P.C., by calling 312-704-0771 today to schedule a confidential consultation. 

Sources:

https://finance.yahoo.com/news/biden-wants-shut-down-credit-195528426.html?guccounter=2

https://www.thebalance.com/bidens-plan-for-national-credit-reporting-agency-5104814

https://www.forbes.com/advisor/credit-cards/from-inherent-racial-bias-to-incorrect-data-the-problems-with-current-credit-scoring-models/