House Passes New Credit Report Legislation : Consumers: The bill, which goes to the Senate for final OK, would force agencies to quickly correct faulty information.

From Associated Press

Legislation that would arm Americans with new power to correct inaccurate credit reports won House passage Tuesday.

The bill shifts the burden of proof from consumers to credit-reporting companies in fighting a system in which lawmakers said erroneous information seems to never be deleted from computerized credit files.

Under the bill, consumers must be notified when action is taken against them because of information in their credit reports. Disputed information must be removed from credit files unless it can be verified within 30 days.

"If these reports are not accurate . . . then our whole society suffers," said Rep. Joseph P. Kennedy II (D-Mass.), chairman of the House Banking consumer subcommittee. "The promise of the information highway has given way to an Orwellian nightmare of erroneous and unknowingly disseminated credit reports," he said.

The measure is a compromise between the House and Senate. The Senate must approve the compromise before it can be sent to President Clinton for his signature.

Under the measure, credit bureaus would be required to provide a free copy of a consumer's credit report within 60 days of an adverse action such as a loan denial and at the conclusion of an investigation into disputed information.

Consumers would also be able to get one copy a year of their reports for $3 and additional copies for $8.

Lawmakers have been trying to enact credit reporting reform since 1989. The last effort, in 1992, fell apart over the issue of whether the new federal law should preempt tougher state laws. This bill preempts state laws for eight years.

Rep. Esteban Torres (D-Calif.), who preceded Kennedy as chairman of the consumer subcommittee, said credit reports are the No. 1 topic of complaints before the Federal Trade Commission and that surveys show one in four to have some inaccuracy.

"The human consequences of these abuses can be devastating. Virtually every adult in America is at risk of falling victim to an industry that is out of control," he said.

Under another provision of the bill, furnishers of credit information such as merchants and banks would be given a chance to correct wrong information they provided to credit bureaus. After that, they would be subject to civil suits.

The bill also requires employers and potential employers to obtain permission from employees or applicants before looking at their credit reports.

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