Is the Government Monitoring your Credit Report?

Yesterday afternoon, the lead headline at DrudgeReport.com was that the U.S. Government is going to begin Monitoring Credit Reports. It would appear that, in typical Drudge style, the headline sought to create fear and distrust, implying that the government was concerned about who you were borrowing money from. This particular article remained up for only a short time, and was quickly taken down to address the more urgent matter: Democrats plan to use Batman Against Romney

An in-depth review of the Credit Report Article would suggest a more benign use of the new U.S. Consumer Financial Protection Bureau (CFFB). According to CFFB director Richard Cordray, beginning on September 30, 2012, the bureau seeks to extend oversight of the 30 largest credit reporting bureaus, which make up about 94% of the credit reporting industry in the United States. Such oversight would help ensure the accuracy of information contained in the reports, provide redress for individuals who have fallen victim to inaccurately-reported information, and provide “clarification as to what the Fair Credit Reporting Act requires of credit bureaus”.

Such an overhaul of the regulatory oversight would seem appropriate, given the importance of credit scores in today’s economy. Banks and other lenders use these scores to measure eligibility for mortgages, credit cards and a wide variety of other consumer loans. Some landlords check them to screen prospective renters, and some companies check credit reports before hiring a new employee. Low scores or problematic credit histories can mean higher interest rates or rejected applications.

A more accurate headline for Drudge to use would have been the actual headline: Consumer bureau to police credit reporting bureaus.  Given the immense power the credit bureaus have over your finances based on how they report your information, perhaps this is a good thing (inasmuch as any further government regulation can be a good thing).