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Credit News | Bankruptcy Statistics | Credit Score Statistics
Credit scores, bureaus & technology. Bankruptcty activity. Credit-related lawsuits, announcements and coverage of F a i r Isaac, E q u i f a x, E x p e r i a n, F I C O, V a n t a g e Score & T r a n s Union.

The Credit Report

Recent actions, regulatory changes and service enhancements tied to credit reporting

April 25, 2011


portrait of Sam Garcia

Regulators keep lobbing new rules and requirements related to credit histories at lenders, but just as quickly -- services are introduced to address the regulations. Other recent activity in credit reporting includes the release of an updated credit-scoring model, a report to Congress about a federal study on credit-reporting errors, and a list of the five states with the highest average credit scores.

On Jan. 1, lenders were required to send risk-based pricing notices that give consumers a free copy of their credit report when an approval at the most favorable terms was not granted. The requirement was implemented by the Federal Trade Commission and the Federal Reserve Board.

A publication from the Fed, What You Need To Know: New Rules about Credit Decisions and Notices, explains the notices consumers can expect in connection with credit decisions. It also provides guidance about what actions should be taken.

A proposal last month from the FTC and the Fed requires creditors to provide a free credit score to the consumer when they didn't get the most favorable credit terms because of their scores.

"The proposed amendments to the rule would reflect new requirements that were added by the 2010 Dodd-Frank Wall Street Reform and Consumer Protection Act," the notice stated. "The proposed amendments would add content to risk-based pricing notices, provide new model notices, and specify certain technical requirements regarding credit score disclosures."

The FTC submitted its annual report on enforcement actions it took related to four regulations including the Equal Credit Opportunity Act and the Truth in Lending Act. The report was presented to the Fed and discussed the agency's activities related to Dodd-Frank.

Prior to that, an FTC report to Congress discussed its study on credit report accuracy. The study, which is still in process, randomly selected 1,000 consumers and encouraged them to dispute credit report errors. The disputed data will be sent to FICO for rescoring, and an estimate will be made about the proportion of consumers who would find one or more material errors in their credit reports. It will reveal the main types of errors as well as other data such as the frequency of the errors and how they impact scores.

The FTC expects to complete data collection by October and deliver results in its next report to Congress at the end of next year.

CoreLogic Credco claims that its latest version of ENCORE includes more fraud-specific alerts and optimized predictive fraud scoring models. The report features applicant credit risk, identity verification and subject-property and market data. It also includes income and employment verification.

"The latest version of ENCORE is designed to significantly improve the accuracy of loan risk detection and assessment," CoreLogic stated.

Also helping with mortgage fraud prevention was Equifax, which announced on March 3 that it has established a relationship with Interthinx to make its undisclosed debt monitoring service available through Interthinx's FraudGUARD. An Equifax executive noted in the statement that its research indicated that $43 million in car payments were overlooked by creditors during the first nine months of last year.

Mortech Inc. said two months ago that an instant-access, credit-reporting-agency connectivity portal has been created for it clients. Its new loan-management and automated underwriting solution parses data from credit reporting agencies that are supported by the National Credit Reporting Association. An estimated 80 percent of all U.S. credit reporting agencies are connected to the new technology, according to the Mortgage Daily advertiser.

In an announcement last month, Credit Plus Inc. said it has been an industry leader in helping mortgage lenders to protect the security, confidentiality and integrity of information contained in consumer reports as required under the Fair Credit Reporting Act. The security measures, according to the Mortgage Daily advertiser, were developed through partnerships with the three major credit repositories: Equifax, Experian, and TransUnion.

Earlier this year, Experian said it incorporated rental payments into its credit reports. The move was made possible through its June 2010 acquisition of RentBureau and could reportedly help the 96 million people that the Costa Mesa, Calif.-based company claims cannot benefit from their rental payment histories.

Experian said it is "the first and only major credit reporting agency to include residential rental payment data in credit reports

VantageScore 2.0 became available in January, Experian said. An optional set of more customer-friendly reason code explanations are among the new features. Chase was cited as an Experian client that was one of the first major lenders to replace some of its FICO usage with the new VantageScore model.

"VantageScore 2.0 was developed due to the extraordinary changes in economic and credit conditions and the ways consumer payment behaviors have markedly changed over the past several years," the statement said. "Testing has shown that the new model improves risk prediction, scores more people and provides more consistent consumer scores across all three credit reporting companies over VantageScore 1.0."

Survey results reported by Mortgage Marval in January indicated that the national average credit score was 735. California's 755 average was the highest in the country. Other high-ranking states included Hawaii, Connecticut and Oregon.

Mississippi's 685 was the lowest.

In February, AllRegs reported that 20 professionals were certified as FICO professionals. AllRegs, a Mortgage Daily advertiser, noted that many of the professionals worked at San Francisco Federal Credit Union and Greater Washington Urban League.

House Bill 245 proposed in the General Assembly of Georgia would require that guarantors be notified when the primary borrower misses the payment, the Atlanta Journal-Constitution reported in February. The sponsor of the bill, independent Rep. Rusty Kidd, was motivated to act after his own credit report was impaired because his sister was attempting to get a loan modification.

Sam Garcia worked in mortgage lending for twenty years prior to becoming publisher of in 2000.

[email protected]

Financial Regulation News | Mortgage Regulations
Bank and mortgage regulators, regulations and regulatory actions. Coverage of regulatory legislation and testimony.
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