Bill May Curb Credit Reporting Abuses : Privacy: Firms have been accused of having high error rates, failing to provide credit histories to consumers and selling data to direct-mail marketers.

A House subcommittee and the Bush Administration appeared to be moving closer to agreement Tuesday on legislation that would put greater limits on the private data banks--including Orange-based TRW Credit Data--that keep computerized credit records on millions of Americans.

An Administration representative, the Federal Trade Commission and public interest groups backed many of the major provisions of a compromise bill. It is one of three competing bills before the House consumer affairs subcommittee that are aimed at overhauling the Fair Credit Reporting Act’s provisions on credit reporting agencies.

The act has come under fire in recent years as being riddled with loopholes that have allowed abuses in the credit data industry. The “credit bureaus,” as the information storehouses are commonly called, have been accused of having high error rates that result in denial of credit, failing to provide complete copies of credit histories to consumers and invading personal privacy by selling some of their information to direct-mail marketers.

While hundreds of credit bureaus exist around the nation, the industry is dominated by three giants--Equifax Inc., TRW Credit Data and Trans Union Corp. The agencies tell merchants whether prospective customers pay their bills in a timely fashion.

Bonnie Guiton, director of the U.S. Office of Consumer Affairs and a special assistant to President Bush, praised some major points in the compromise bill. Among them was a provision to allow individuals to prevent credit bureaus from adding their names to junk mailing lists that are sold to marketers.

The compromise bill offered by the subcommittee’s chairman, Rep. Richard H. Lehman (D-Sanger), represents a softer approach to the mailing list issue. Two other measures before the subcommittee would ban the practice altogether.

Guiton said Administration opposition to the Lehman bill centers on provisions that would require credit bureaus to give consumers one free credit report a year and offer updates for no more than $8 each. She said credit bureaus should be allowed to charge a fee that will cover their actual costs of providing the reports.

Representatives of the three major credit bureaus and their trade organization said they believe that the legislation is unnecessary. They said the subcommittee should not pass a bill based simply on a handful of highly publicized complaints about allegations of wrongdoing and illegal taps into credit bureau computers.

“We do not believe that is prudent to alter radically a law and a system that has served both consumers and the credit granting community on the basis of a few horror stories,” said Walter R. Kurth, president of the trade association, Associated Credit Bureaus Inc.