Americans who have been denied a loan, a job or the chance to buy a home because of inaccurate credit reports would get new power to correct the record under legislation passed by the Senate on Wednesday.
The bill, approved 87 to 10, marks the first major overhaul of the Fair Credit Reporting Act of 1970, which was designed in an era when the credit bureaus operated with handwritten file cards.
The bill contains many protections that Californians already have under existing state law, but it would potentially lower the cost of obtaining a copy of a credit report. It also strengthens protections when employers request credit reports.
The bill and similar legislation cleared by the House Banking Committee would shift the burden of proof in disputes from the consumer to the credit bureau. After receiving a complaint, bureaus would be required to either verify the disputed information within 30 days or delete it.
For the first time, businesses that supply information to credit bureaus would also be obligated to investigate disputed information and would be subject to civil suits for failing to comply.
One provision gives consumers the right to obtain their credit report once a year for $3, rather than as much as $25 currently charged in some states and $8 charged under California law. Another requires credit bureaus to establish toll-free telephone lines to take complaints, a requirement already in effect in California.
The bill, like California's law, would also restrict credit reports to users who can cite a legitimate use, such as a lender, employer or insurer.
Employers could obtain credit reports only after notifying employees or prospective employees and would have to give them five days to respond to unfavorable information. In California, credit bureaus must send an employee or prospective employee a copy of his or her credit report when an employer requests one, but the five-day response time is not stipulated.
Another provision seeks to rein in abuses among "credit repair" organizations that promise--usually for a high fee--to fix consumers' credit records.
The bill would allow credit bureaus to use credit records to compile direct-marketing mailing lists. However, consumers would have the right to keep their names off such lists by calling or writing the bureaus. California consumers can do this already. The bill would also allow affiliated companies to share credit reports, unless a consumer denies permission.