Photo: Amy Sussman (Getty Images)

Do you know what your credit score is? Do you know what it is at all three bureaus? The numbers are not the same.

Do you know what factors contribute to your credit score? Do you know how it’s calculated? Do you know what to do if you find incorrect information on your credit report? Do you even know how to get a copy of your credit report?

The credit reporting industry is a mysterious and confusing beast—perhaps intentionally so—and for as much impact as it has on consumers, it does not give them the tools they need to work within its confines and navigate its rules and regulations.

If Rep. Maxine Waters (D-Calif.) has her way, that could all change.

The Los Angeles Times reports that Waters, who is now the chair of the House Financial Services Committee, called for a consumer-friendly overhaul of the credit reporting system Tuesday as the chief executives of Equifax, Experian, and TransUnion—the three major credit bureaus—testified before her committee.

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Waters rightly referred to it as a “broken system” because it is.

“To credit reporting bureaus, consumers aren’t consumers. They are commodities,” Waters said. She added that dissatisfied Americans can’t just take their business to another company.

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The three credit bureaus collect information on American consumers from banks and other firms that include their payment history on mortgages, credit cards, auto loans and other debt. While the information they collect and report has a direct impact on people’s ability to get bank accounts, obtain credit, buy homes, cars and even finance an education, the bureaus themselves have don’t have a direct relationship with consumers because their customers and their priority are the companies seeking a person’s credit history.

Waters sees that as the biggest part of the problem.

“This commodification of consumers and their personal data is the core reason why our nation’s consumer credit reporting system is broken,” she said.

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Waters released a 199-page discussion draft of a bill that would, among other things, reduce the amount of time negative information stays on a person’s credit report—taking it down from 7 years to just four. It would also require companies to remove negative items within 45 days of the debt being settled or paid.

Waters also seeks to restrict credit checks as a requirement for job applicants so that they are only used as required by federal, state or local law or when it is needed as part of a security clearance.

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In cases of incorrect information on a credit report, the burden of having that information changed or removed would be placed on the credit bureaus and the firms reporting the erroneous information. Consumers would also have the right to appeal decisions on disputed information.

The Times reports that the heads of the credit bureaus were not pleased with the idea of more federal regulations for their companies.

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Craig Boundy of Experian said the proposal “could negatively impact a lender’s ability to assess risk and … it has the risk of increasing the cost consumers’ access to credit.”

Yes. Read that last quote again. Not sure how making the credit reporting system more consumer-friendly is going to end up costing consumers more, but that is the way the game is played I suppose.

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The highest ranking Republican on the committee agrees with Waters assessment.

Rep. Patrick McHenry (R-N.C.) told the chief executives that they have an “oligopoly” in that there is no competition for the three bureaus, and they don’t even directly compete with each other. As previously stated, all three report different scores and sometimes differing information for the same people.

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“We have three of you not really competing and the consumers are the ones that are losing out. I think that’s a problem,” McHenry said. “How does an oligopoly protect consumers?”

The executives had no answer for him, and McHenry said: “I’ll take that as an answer.”

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The three executives claimed that they want to improve the credit reporting system, but Waters was skeptical, according to the Times. She asked if “we need to ask whether the system is so beyond repair that we need to completely rebuild the entire consumer credit reporting sector to truly put consumers first.”

Chi Chi Wu, staff attorney at the National Consumer Law Center, told committee members that the system for disputing information in a credit report is a “Kafkaesque nightmare” that needs reform.

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Rep. Gregory Meeks (D-N.Y.) pointed out that the data the credit reporting companies use to belong to consumers, but there is nobody advocating on their behalf. This is especially crucial when it comes to poor people, he said. Incorrect information on a credit report could cost a person a job.

“It seems as though the three of you basically can control that ... and that person, therefore, is out of a job and therefore can’t climb their way out of poverty,” Meeks said.

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Let’s hope this legislation gets the bipartisan support it needs to pass.

We could all use a break on our credit.

Corrected Friday, March 1, 2019, 10:03 a.m. EST: A quote attributed to Craig Boundy of Experian by the LA Times erroneously omitted two words that changed the entire meaning of Mr. Boundy’s statement to the committee. That quote has now been corrected to reflect what Mr. Boundy said in full.