New Bill in Congress Could Reform Credit Scoring in Favor of Consumers, Says Pioneer Law Firm

October 7, 2014 - Westminster, CO – Pioneer Law (PioneerLawFirm.com) a Colorado firm providing bankruptcy, FDCPA, real estate, and business law services endorses the Fair Credit Reporting Improvement Act of 2014. The new bill in Congress makes important updates to the 1970 Fair Credit Reporting Act with great benefits to credit scoring for all Americans. Reducing the impact of credit blemishes, credit inquiries, and paid/settled debt impact scores will mean better interest rates and loan approval rates for more consumers with negative credit histories.

Introduced this month by House Financial Services Committee Chairwoman, Rep. Maxine Waters (D-Calif.), the bill reflects growing support for modernization of American financial systems. Earlier this year the Consumer Financial Protection Bureau (CFPB) released reports calling for reform to debt collection, lending practices, and credit scoring. Last month Fair Isaac Corp. announced changes to FICO Score calculations, now treating medical debt differently than other forms and reducing the impact of settled debt.

The Fair Credit Reporting Act would see the largest changes since its creation 44 years ago. Under the Fair Credit Reporting Improvement Act of 2014, consumers would have better safeguards and reduced negative impact to credit scores. Late payments and negative credit events would be removed from consumer reports after four years instead of seven years currently. Bankruptcies would be removed in seven years instead of 10 years. Collections and paid/released tax liens would be removed after four instead of seven years. The removal of any adverse debt information would occur 45 days after those debts are fully paid or settled.

Foreclosures, short sales, or other derogatory real estate loans would be removed if the FTC or CFPB determine the lender applied deceptive lending practices. Mortgage, auto, or student loan inquires that occur within 120 days would be treated as a single inquiry, with less impact on credit scores. Negative impact to credit scores from student loans would be removed after nine consecutive on-time payments. The new bill also takes proactive steps to define that Fannie Mae and Freddie Mac would be required to regularly validate scoring models to be statistically sound, reflecting the situation of average American.

The new bill introduces consumer safeguards with new requirements for lenders and credit bureaus in reporting debt, correcting errors, and making the lending process more transparent. These and other provisions could bring resistance from within the industry. However the Fair Credit Reporting Improvement Act does bring needed reform during a time when banks have made credit harder to get, foreclosed record homes, and also reported record profits.

"The role of credit, debt financing, and credit reporting in America has evolved greatly in the last ten years, let alone the last 45, and this new bill reflects our new reality. The role of savings in personal finance has changed, credit cards are a way of life, and credit scores define who we are and what we pay." says John Dougherty, Founding Attorney at Pioneer. "For the wallet of the average American, the bill will bring better credit scores with more favorable interest rates that could translate to thousands of dollars a year for large debt. The new bill is a major step advocating for consumer financial rights and needs the support of average Americans to guarantee its passage in Congress."

About Pioneer Law
Pioneer Law is a legal firm specializing in Bankruptcy, Business Litigation, FDCPA, and Real Estate law. For those paralyzed by debt, disputing with a business, troubled by a collector, or involved in the sale of real estate, the specialists at Pioneer Law are prepared to advise, represent, and give peace of mind. For more information visit PioneerLawFirm.com.