CFPB to step in on shoddy credit reporting
Nov 02, 2012 Walt Wojciechowski
The San Francisco Chronicle recently reported that the Consumer Financial Protection Bureau (CFPB) will be offering more assistance to businesses and consumers regarding their credit scoring. According to the news provider, federal regulators have increased efforts to suss out errors in credit reporting from the three major bureaus, as complaints have spiked in recent months. The source explained that incorrect information can have a significantly poor impact on consumers' daily lives, and often go unnoticed for long stretches of time. The CFPB will be cracking down on the first three major credit reporting agencies, as well as the next 27 biggest entities in the industry, accounting for roughly 94 percent of the industry. The government gave this responsibility to the CFPB because the Federal Trade Commission, which was previously responsible for regulating the industry, did not have the authority to prosecute credit reporting agencies for shoddy practices. While this spells good news for consumers affected, it is even more helpful to enterprise credit risk managers. Credit risk management made more accurate
Credit risk managers have to pay attention to a wide range of issues when assessing consumers and other businesses for lending purposes. As many errors have been found in credit scoring practices, the CFPB's new ability to investigate and regulate the industry will translate to more accurate decision-making by corporate executives. Credit risk managers should consider assessing potential clients through alternative reporting channels, as this can give a more accurate view of the threats or benefits involved with the dealings. Further, businesses and individuals that believe their scores are inaccurate should immediately notify the CFPB, as this will improve the accuracy in reporting and increase their chances of being approved for loans.