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Disputes
Consumers must be guaranteed that disputed informat
investigated by the credit bureau rapidly within 3
credit bureaus will be required to take into acco
that the consumer provides, and that the bureaus
established and publicly available procedures in

investigation.
o Suppliers of Information

often, consumers get information deleted fror
have their bank or other creditor simply rer
bureau again. Suppliers of credit informat
exercise every possible effort to ensure the

information they provide. o Understandable Format

Too often, when a consumer does pay for
he or she gets is an unintelligible for
abbreviations that may make sense only

Disclosures to consumers must be mado o Inquiries

since creditors often deny credit í.
of inquiries in his or her credit
bureaus report to potential credit
which the consumer is responsib
specifically authorized by the
illegal for the credit bureaus
generated by their target mari
illegal for credit bureaus to
the consumer knew nothing at
dealer example).

The fact that the credit buis millions of dollars exploiting to to develop mailing lists for jurii prohibitions demonstrates that you Chairman, is critical.

Let me also say that I have willingness on the part of the in appropriate and workable amendmer hopes that they can kill any cha' to enact it. I would suggest tha** counterproductive approach.

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SO

ior this opportunity to testify on the the Fair Credit Reporting Act. without sue of how personal credit records can be As consumers have against their misuse, ideration. I would like to express my le opportunity to work with you, and for ution that your staff have extended to

R. 3740 last November, I have received

personal credit information being misused tions of consumers. Yet, the Fair Credit

osed to restrict the way that credit records 2d.

20 years ago, when credit bureaus kept their is.

Now they consist of huge interconnected wat contain incredible volumes of information. suters has made collecting and manipulating

Y easy. The law has not kept pace, and there orts of abuses.

,or problems. What personal credit records can whether they are accurate.

:iness Week reporter examined the credit files of Dan Quayle and one of our House colleagues. The

reports that a woman's unlisted phone number was credit records by a man who wanted to date her. also reports that a major issuer of credit cards stomer's checking account and cut off his account lieved that he did not have enough money to pay a ey had not even issued yet. eet Journal recently reported that employers are o use credit reports to screen job applicants. to the story, many employers appear to violate even the isclosure requirements, by not explicitly informing applicants that their credit records had been used. acords are more than just account numbers. They are a 's reputation. For example, by using this information, is of information about his or her personal habits, buying es, or lifestyle can be determined. It is one thing for formation to be collected and used with the permission and ige of a consumer, but it is quite another for this to be ecretly and behind his or her back.

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All of us have had our credit records checked without our knowledge or consent. As an example, the bank that offers a consumer a pre-approved line of credit has examined the credit file before writing to the person. There are minimal restrictions on what credit records can be used for, and a credit bureau's imagination is the only real limit on what it can do with the information. It really makes no difference whether credit records are checked by computer or by hand. A consumer's privacy has been violated regardless of the method used.

Credit information can easily be combined with demographic data and other information to create a compete picture of an individual's life. While one credit bureau proudly states that it keeps credit information in a different state from other types of data, even my small congressional office has a computer that can transfer data between Washington and New Jersey. A company can request a mailing list of all Union County, New Jersey residents with incomes of over $50,000, and unused credit lines of at least $10,000 on existing bank credit cards, who already have certain local department store credit cards, and who have two or more children.

While banks that issue credit cards get most of the attention, the company requesting such a list could be a realtor specializing in time-share vacation homes, or a mail order clothing retailer. One of my staff members reports being harassed by a auto dealer offering pre-approved financing on certain car models.

Since credit bureaus make huge profits by finding new ways to sell personal credit records, they have shown no interest in seriously protecting a consumer's privacy. These records are valuable to anyone, including swindlers and unscrupulous business people, who want to find out about a person's financial condition or lifestyle. As the Business Week story showed, it is only too easy to get this type of information. It is time to stop this practice now.

Many of these personal credit histories are not accurate, and even if a consumer does find out that his credit record has false or inaccurate information, it can be very difficult for the consumer to have errors corrected.

Corrections can take months. Credit bureaus collect information by computer, but corrections have to be done by hand. They have kept costs down by making it hard for consumers to get and correct their files. There are three different national data bases, and each must be corrected separately. Meanwhile, consumers suffer embarrassment and could be unjustly denied jobs, apartments, credit purchases, etc.

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A consumer who applies for a mortgage, and finds that his credit record includes overdue accounts from department stores in cities that he has never visited, may find that it takes an incredible amount of effort to correct his credit history. If he does correct one set of records, he may find that an equal amount of work may be required to clear his record with the other two credit reporting companies. Finally, a consumer may apply for a mortgage and find that his credit record includes one account which accurately reported a delinquency through an error that the consumer made several years ago. However, because there is no requirement that the consumer be notified that he has been reported to a credit bureau, he may be completley unaware of his error until after the mortgage is denied.

I

My legislation, H.R. 3740, includes several specific reforms. Many of them are also included in your bill, H.R. 4213. believe that a thorough reform of the Fair Credit Reporting Act is long overdue, and I look forward to working with you as this effort continues through Congress.

I believe that the final bill should include:

I.

DISCLOSURES TO CONSUMERS:

Creditors should be required to inform consumers in writing at the beginning of a credit relationship what information will be forwarded to a credit bureau in the event of late payments.

Creditors should be required to inform consumers when they have been reported to a credit bureau by placing a notation on their next account statement.

Credit bureaus should be required to provide consumers on
demand with a free copy of their credit record. consumers
will then be able to check the accuracy of their records.
This will also eliminate a provision that allows credit
bureaus to provide only the "nature and substance" of the
report instead of an actual copy.
A consumer should be notified any time that a credit report
is used.

All disclosures that a consumer has been denied a transaction based on credit records should be in writing, and include a copy of the credit report, a notice of rights under the FCRA and the names, addresses and telephone numbers of all three major credit reporting bureaus.

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The current "legitimate business needs" criteria for
requesting a credit report should be changed to language
that allows it to be only used for transactions initiated by
the consumer. This change will eliminate using credit
records for prospective credit solicitations, marketing
plans, mailing lists, or similar purposes.
There is more at stake here than just credit prescreens. If
the Subcommittee chooses to still allow credit prescreens, I.
hope that you prohibit the use of credit records for other
marketing purposes. Credit records are not supposed to be
used to sell clothes, cars or real estate.
Even in a credit prescreen, a large and clear notation
should be required stating that an individual's credit
records have been examined. In addition, an easy way to
prevent future uses of this information should be provided,
including at the least, a toll-free phone number and a
central clearing house that will inform all three major
credit bureaus of the consumer's wishes. The law should
also require the credit bureaus to respect the consumer's
desire for privacy.

III. INFORMATION THAT CAN BE COLLECTED:

The current provision that allows information to be
collected on "credit worthiness, credit standing, credit
capacity, character, general reputation, personal
characteristics, or mode of living" should be changed to
factual information on payment records and financial and
legal information.

The current provision that requires all information to be kept up to seven years should be changed to a sliding scale that would retain serious credit problems up to seven years, but require less serious problems to be purged from a record earlier.

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An FTC study should be mandated to recommend procedures for
credit bureaus to reach the maximum possible accuracy in the
information that they collect.
Any information contested by the consumer should be required
to be reinvestigated within 30 days. currently, there is no
requirement to ensure a timely correction.

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