Consumer Credit Reporting, Credit Bureaus, Credit Scoring, and Related Policy Issues

July 30, 2015 – October 12, 2023 R44125

Consumer Credit Reporting, Credit Bureaus,
October 12, 2023
Credit Scoring, and Related Policy Issues
Cheryl R. Cooper
Consumer credit reporting agencies (also called credit bureaus or CRAs) collect and
Analyst in Financial
subsequently provide information to firms about consumer credit and payment behavior,
Economics
called consumer reports or credit reports. Credit scores are (numeric) metrics used to

predict a variety of financial behaviors, computed using the information obtained from
one or more consumer reports. Firms use credit report and score information to screen

for consumer risks. For example, lenders may rely upon credit reports and scores to determine the likelihood that
a prospective borrower will repay a loan (e.g., a mortgage or credit card). The consumer credit reporting system
benefits the consumer lending industry by making credit underwriting cheaper and easier and by creating an
additional incentive for consumers to pay back their loans on time.
Equifax, Experian, and TransUnion are the three largest nationwide providers of credit reports, sometimes called
nationwide consumer reporting agencies. These credit bureaus generally create consumer credit reports
containing historical information about repayment on credit products such as mortgages, student loans, credit
cards, and auto loans. Credit applications, bankruptcies, and debts in collection are also regularly included. Other
CRAs provide a variety of specialized consumer reporting services, including employment screening, tenant
screening, and check and bank screening.
Firms that use consumer reports may also report information to CRAs, thus serving as furnishers. Furnishing
information is voluntary, and furnishers are not required to submit their information to all CRAs. Consumer credit
reports are more comprehensive and therefore more valuable as more companies choose to participate as
furnishers. However, furnishers incur costs to report data—for example, by meeting regulatory requirements to
ensure accuracy of consumer information.
Reliance by firms on consumer data significantly affects consumer access to financial products or opportunities.
For example, consumers with strong credit reports may have greater access to credit, but negative information,
such as loan defaults, may cause a lender to deny a consumer access to credit. In recent years, average consumer
credit scores have improved due to COVID-19-era forbearance and credit reporting protections, as well as
improved financial situations for consumers.
Consumers generally do not choose to participate in the credit reporting system. For this reason, consumer
protection laws and regulations may be particularly consequential. The Fair Credit Reporting Act (FCRA; 15
U.S.C. §1681), implemented by Regulation V, is the main statute regulating the credit reporting industry. The
FCRA establishes consumers’ rights in relation to their credit reports. It also imposes certain responsibilities on
those who collect, furnish, and use the information contained in consumers’ credit reports. The Consumer
Financial Protection Bureau (CFPB) has rulemaking and enforcement authorities over all CRAs for the FCRA and
certain other consumer protection laws. It has supervisory authority, or the authority to conduct examinations,
over the larger CRAs. The CFPB receives far more complains about credit reporting than any other industry it
regulates. In 2022, more than three quarters of complaints that the agency received were from credit reporting,
most frequently from the three nationwide CRAs.
Congress has shown continuing interest in policy questions surrounding CRAs, credit reports, credit scores, and
the consumer data industry. Policy issues include (1) how inaccurate or disputed consumer data provided in
consumer reports should be addressed; (2) consumers’ rights in the credit reporting system; (3) whether and how
medical debt should be included in credit reports; (4) whether uses of credit bureau data outside of the financial
services, such as for employment or rental decisions, should be limited; (5) whether the use of alternative
consumer data may increase accuracy and credit access; and (6) how to address data protection and security issues
in consumer data reporting.
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Consumer Credit Reporting, Credit Bureaus, Credit Scoring, and Related Policy Issues

Introduction
Consumer credit reporting agencies (also called credit bureaus or CRAs) collect and subsequently
provide information to firms about consumer credit and payment behavior, called consumer
reports or credit reports. Firms use credit report information to screen for consumer risks. For
example, lenders rely upon credit reports and scoring systems to determine the likelihood that
prospective borrowers will repay their loans.
The consumer credit reporting system provides benefits to the consumer lending industry by
making credit underwriting cheaper and easier and by creating an additional incentive for
consumers to pay back their loans on time. Since the 1970s, consumer loan underwriting has
become more automated, first with the increasing use of credit scores and more recently with new
data and technologies.1 Credit scores are a (numeric) metric calculated with information in
consumer credit reports and prepared, for example, for lenders to determine the likelihood of loan
default. Credit scores are generally calculated using algorithms, which are pre-coded sets of
instructions and calculations that are executed automatically. Lenders may rely upon credit scores
to help decide whether to offer consumers loans and at what terms.
Reliance by firms on consumer data significantly affects consumer access to financial products or
opportunities. For example, negative or derogatory information, such as loan delinquencies or
defaults, may influence a lender to deny a consumer access to credit. The inclusion of negative
information may be particularly limiting to consumers under circumstances in which such
information is inaccurate or needs to be updated to reflect more current and possibly improved
financial situations. Furthermore, consumers may find the process of making corrections to
consumer data reports to be time-consuming, complex, and perhaps ineffective. The exclusion of
more favorable information, such as the timely repayment of noncredit obligations, from standard
credit reporting or scoring models may also limit credit access.
Although the general public is likely to be more familiar with the use of credit reporting and
scoring to qualify for mortgage and other consumer loans, the scope of credit report use is
broader. For example, employers may use credit reports to screen prospective employees to
determine the likelihood of fraudulent behavior. Landlords may use consumer data to determine
whether to lease an apartment to a prospective tenant. In short, numerous firms rely upon
consumer data to identify and evaluate the risks associated with entering into financial
relationships or transactions with consumers.2
This report first provides background information on the consumer data industry and various
specialty areas. An overview of a prominent specialty area, consumer scoring, is discussed and
along with various factors used to calculate credit scores. Next, the report provides a general
description of the current regulatory framework of the consumer data industry. Finally, the report
discusses selected policy issues pertaining to consumer data reports. Specifically, the report
addresses policy issues concerning (1) inaccurate or disputed consumer data provided in
consumer data reports; (2) consumers’ rights in the credit reporting system; (3) whether and how
medical debt should be included in credit reports; (4) whether uses of credit bureau data outside

1 Faster computing power, internet-based products, and cheaper data storage at scale have increased automation in
consumer lending. New technological innovations have been used to update automated processes, in some cases
beyond traditional numeric credit scores. For example, for some lenders, the internet has been incorporated to accept
applications, and new data sources are used to conduct consumer loan underwriting. For more information, see CRS In
Focus IF12399, Automation, Artificial Intelligence, and Machine Learning in Consumer Lending, by Cheryl R. Cooper.
2 For a list of consumer reporting agencies, see Consumer Financial Protection Bureau (CFPB), “List of Consumer
Reporting Agencies,” https://www.consumerfinance.gov/consumer-tools/credit-reports-and-scores/consumer-reporting-
companies/companies-list/.
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link to page 22 Consumer Credit Reporting, Credit Bureaus, Credit Scoring, and Related Policy Issues

of the financial services, such as for employment or rental decisions, should be limited; (5)
whether the use of alternative consumer data may increase accuracy and credit access; and (6)
how to address data protection and security issues in consumer data reporting. For more
information on credit reporting relating to natural disasters, government shutdowns, and the
COVID-19 pandemic, see the Appendix.
The Consumer Data Industry and Specialty
Services3
This section provides background information on the consumer data industry, particularly the
CRAs. It also provides background on credit scoring along with a summary of key factors known
to affect credit scores.
Consumer Reporting Services
CRAs are firms that prepare consumer reports based upon historical data of individuals’ financial
transactions. Equifax, Experian, and TransUnion are the three largest nationwide providers of
credit reports, sometimes referred to as nationwide consumer reporting agencies. These credit
bureaus generally create consumer credit reports containing historical information about
repayment on credit products such as mortgages, student loans, credit cards, and auto loans.
Credit applications, bankruptcies, and debts in collection are also regularly included.
Other CRAs provide a variety of specialized consumer reporting services, including employment
screening, tenant screening, and check and bank screening.4 These credit reports may include
historical information about credit repayment; utility, telecom, and rent payment; employment;
insurance claims; arrests; bankruptcies; and check writing and account management. Consumer
files, however, generally do not contain information on consumer income or assets or personal
information such as race or ethnicity, religious or political preference, or medical history.5
Firms that use consumer reports may also report information to CRAs, thus serving as
furnishers.6 Furnishing is voluntary, and furnishers have discretion over the types of obligations
they wish to report to each CRA.7 Therefore, there is significant variance in what information is

3 This section of the report was originally authored by Darryl Getter.
4 Some specialty CRAs are subsidiaries of larger CRAs. Examples include the National Consumer Telecom and
Utilities Exchange (http://www.nctue.com/), which is managed by Equifax, and RentBureau
(https://www.experian.com/rental-property-solutions/rental-history), which is owned by Experian.
5 See Federal Reserve, “Federal Fair Lending Regulations and Statutes: Equal Credit Opportunity (Regulation B),”
Consumer Compliance Handbook, http://www.federalreserve.gov/boarddocs/supmanual/cch/fair_lend_reg_b.pdf; and
Experian, “Basic Questions About Credit Reports and Credit Reporting,” https://www.experian.com/assets/consumer-
education-content/brochures/Reports_Issue_1.pdf.
6 A tradeline is a record of the transaction (payment) activity associated with a consumer account that is reported by a
furnisher to a CRA. See Experian, “Glossary of Credit Terms,” https://www.experian.com/blogs/ask-experian/credit-
education/faqs/glossary/.
7 A community bank, for example, may choose to report delinquencies on consumer loans rather than on commercial
loans given that it may have greater information regarding the cash flow circumstances of its larger commercial
borrowers. See Federal Trade Commission (FTC) and Federal Reserve, Report to Congress on the Fair Credit
Reporting Act Dispute Process, August 2006, https://www.federalreserve.gov/boarddocs/rptcongress/fcradispute/
fcradispute200608.htm.
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reported to different CRAs. For example, some furnishers may choose not to fully report
information for a variety of different reasons.8
Consumer credit reports are more comprehensive and therefore more valuable as more companies
choose to participate as furnishers. However, furnishers incur costs to report data—for example,
by meeting security requirements when transferring data and procedures to ensure accuracy of
consumer information. To become furnishers, firms must be approved and comply with the
policies of a CRA, such as fee registration requirements.9 The transfer of consumer data involves
security risks, and many CRAs have adopted standardized reporting formats and requirements
approved by the Consumer Data Industry Association for transferring data.10 Furnishers must be
able to comply with industry data transfer requirements or some CRAs are unlikely to accept their
data.11 Compliance costs may be more burdensome for smaller firms, causing some to choose not
to be furnishers. In addition, entities that elect to become furnishers face legal obligations, which
may also influence a firm’s decision to become a furnisher.12
Generally, CRAs earn revenues by selling credit reports to firms, as well as other related services,
such as credit scoring analysis (discussed in more detail in the next section).13 Business models
and policies of CRAs are different. Some CRAs may regularly maintain information on
consumers, others may offer investigative services to gather information about consumers, and
some may do a combination of these activities. Moreover, different CRAs may adopt different
conventions for storing consumer information. Consequently, consumer reports obtained from
different CRAs on the same consumer are likely to differ.

8 For example, some large credit card companies may be choosing not to report payment amounts to the nationwide
consumer credit reporting agencies, possibly for competitive reasons. Logan Herman, Jonah Kaplan, and Austin
Mueller, Payment Amount Furnishing and Consumer Reporting, CFPB, November 2020,
https://files.consumerfinance.gov/f/documents/cfpb_quarterly-consumer-credit-trends_report_2020-11.pdf; and John
McNamara, “Why the Largest Credit Card Companies Are Suppressing Actual Payment Data on Your Credit Report,”
CFPB, https://www.consumerfinance.gov/about-us/blog/why-the-largest-credit-card-companies-are-suppressing-actual-
payment-data-on-your-credit-report/.
9 For examples of some furnisher requirements, see Experian, “Reporting to Credit Agencies,”
http://www.experian.com/consumer-information/reporting-to-credit-agencies.html.
10 For more information on credit reporting furnishing requirements, see Consumer Data Industry Association, “Metro
2 Format for Credit Reporting,” https://www.cdiaonline.org/resources/furnishers-of-data-overview/metro2-
information/.
11 Compliance may require investing in technology compatible with the computer systems of a CRA.
12 Furnishers are obligated to report accurate and complete information as well as to investigate consumer disputes. See
FTC, “Consumer Reports: What Information Furnishers Need to Know,” https://www.ftc.gov/tips-advice/business-
center/guidance/consumer-reports-what-information-furnishers-need-know.
13 Jonathan Burns, “Credit Bureaus and Rating Agencies in the US,” IBISWorld, January 2023, p. 15.
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Credit Repair and Credit Counseling Services
Some consumers turn to credit repair and credit counseling services when they want help identifying and disputing
inaccurate information in their credit reports, access to financial education14 and debt management plans,15 and
support to improve their credit report and financial situations.16 Generally, credit repair companies operate for
profit, while credit counseling services are provided by nonprofits, although services that these types of
organizations offer to consumers may be similar.17 Credit repair company revenue declined during the COVID-19
pandemic due to stronger household finances,18 and more consumers are using internet resources to dispute
information themselves.19 In contrast, consumer demand for credit counseling services has increased.20 Going
forward, increasing interest rates may make it harder for consumers to pay off debt, increasing demand for credit
repair and credit counseling services.21
Credit Scoring Services
A consumer score is a (numeric) metric that can be used to predict the likelihood of a variety of
financial behaviors.22 Consumer credit scores are prepared for lenders to determine, for example,
the likelihood of loan default for a particular type of credit (e.g., a mortgage or credit card). Other
consumer scores can be prepared to predict the likelihood of filing an insurance claim,
overdrawing a bank account, failing to pay a utility bill, committing fraud, or a host of other
adverse financial behaviors. Consumer scores are typically computed using the information
obtained from one or more consumer reports. Some firms, including CRAs, create consumer
reports and scores, while others are primarily engaged in only the production of consumer
scores.23 Hence, consumer scoring can be considered a specialty service in the consumer data
industry. For example, if a user of a consumer report subsequently wants a consumer score, it
may be charged an additional fee.
Given the variety of different financial behaviors firms may want to predict, there are many
consumer scores that are calculated. Consumer scores for the same individual and behavior
calculated by different scoring firms are also likely to differ. Consumer scoring firms may have
purchased consumer information from different CRAs, which have their own policies for storing
and reporting information. Each scoring firm has its own proprietary statistical model(s), meaning

14 For more information on financial literacy and education, see CRS Report R46941, Financial Literacy and Financial
Education Policy Issues, by Cheryl R. Cooper.
15 For information on debt management plans, see Christa Gibbs et al., Recent Trends in Debt Settlement and Credit
Counseling, CFPB, July 2020, https://files.consumerfinance.gov/f/documents/cfpb_quarterly-consumer-credit-
trends_debt-settlement-credit-counseling_2020-07.pdf.
16 See CFPB, “What Is Credit Counseling?,” February 2, 2018, https://www.consumerfinance.gov/ask-cfpb/what-is-
credit-counseling-en-1451/; and CFPB, “What’s the Difference Between a Credit Counselor and a Debt Settlement or
Debt Relief Company?,” August 24, 2022, https://www.consumerfinance.gov/ask-cfpb/whats-the-difference-between-
a-credit-counselor-and-a-debt-settlement-or-debt-relief-company-en-1449/.
17 Campbell Lang, “Credit Repair Services in the US,” IBISWorld, June 2022, p. 4.
18 For more information on household debt during the COVID-19 pandemic, see CRS Report R46578, COVID-19:
Household Debt During the Pandemic, coordinated by Cheryl R. Cooper.
19 Campbell Lang, “Credit Repair Services in the US,” IBISWorld, July 2023, pp. 8-16.
20 Brendan McErlaine, “Credit Counselors, Surveyors, and Appraisers in the US,” IBISWorld, October 2022, pp. 10-15.
21 Brendan McErlaine, “Credit Repair Services in the US,” IBISWorld, July 2023, pp. 8-16.
22 The predictability power of consumer scores, assuming no significant changes in consumer repayment patterns, may
last for approximately one to two years. For examples of various types of scores and corresponding estimated months
of predictive power, see TransUnion, “Scores Overview,” http://www.transunion.com/docs/financialServices/
FS_ScoresOverview.pdf.
23 FICO (see http://www.fico.com/en/) and VantageScore (see http://www.vantagescore.com/) are examples of firms
that specialize in the production of credit scores.
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that each firm decides what consumer information should be included and excluded from
calculations. Each firm can choose its own weighting algorithms. For example, included
information can be equally weighted, or heavier weights can be placed on more recent
information or on information otherwise deemed more pertinent. Sometimes the consumer
scoring firm selects the appropriate weighting scheme, and sometimes the requestor of a
consumer score may provide instructions to the preparer.
In recent years, average consumer credit scores have improved due to COVID-19-era forbearance
and credit reporting protections,24 as well as improved financial situations for consumers.25

24 For background on consumer loan forbearance and other relief options during the COVID-19 pandemic, see CRS
Report R46356, COVID-19: Consumer Loan Forbearance and Other Relief Options, coordinated by Cheryl R. Cooper.
25 Alyssa Brown and Siobhán McAlister, “Credit Score Transitions during the COVID-19 Pandemic,” CFPB, January
25, 2023, https://www.consumerfinance.gov/about-us/blog/office-of-research-blog-credit-score-transitions-during-the-
covid-19-pandemic/; and Scott Fulford, Marie Rush, and Eric Wilson, Changes in Consumer Financial Status During
the Early Months of the Pandemic: Evidence from the Second Wave of the Making Ends Meet, CFPB, April 2021,
https://files.consumerfinance.gov/f/documents/cfpb_making-ends-meet-wave-2_report_2021-04.pdf.
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Consumer Credit Reporting, Credit Bureaus, Credit Scoring, and Related Policy Issues

Some Factors Frequently Used to Calculate Credit Scores26
To calculate a credit score, credit scoring models generally obtain the fol owing factors from a credit report:
•
Payment history. A lender is concerned about the borrower paying past credit accounts on time. Payment
history includes information related to late or missed payments, how late, amount owed, bankruptcies,
foreclosures, lawsuits, and wage garnishments. Negative information on a credit report negatively affects a
credit score.
•
Credit utilization. This factor measures the amount of outstanding debt a consumer has accumulated
relative to his or her credit limit. An individual with $3,000 in charges on a credit card with a $5,000 limit
would have a credit utilization rate of 60%. A high credit utilization rate negatively affects a credit score.
•
Length of credit history. The more experience an individual has using credit, the easier it is for a lender to
determine how well or poorly additional credit wil be managed. Calculating credit scores may be impossible
for “invisible” consumers (i.e., consumers with either no credit history or an insufficient credit history).
•
New credit accounts or requests. There are two types of inquiries: A soft inquiry occurs when
consumers request to check their credit reports, typically for accuracies or to dispute information, but there
is no corresponding request for credit. Users of credit reports do not receive information regarding soft
inquiries. A hard inquiry occurs when consumers apply for credit, and action is required by users of credit
reports, typically to make approval or rejection decisions. Hence, making numerous different credit requests,
particularly over a short period of time, generally can negatively affect a score. If a consumer shops for credit,
which would be indicated by applying for the same type of credit within a short period of time (e.g., two to
six weeks), then that activity would count as only one hard inquiry in most credit scores.27 Prescreening,
which is used frequently in credit card solicitations, does not count as a “firm offer of credit or insurance”
and, therefore, does not affect consumer credit scores.28
•
Credit mix. Demonstrating the ability to manage multiple types of credit obligations (i.e., revolving,
installment, mortgage credit, and finance company credit) influences a credit score. For example, the ability to
maintain a stable debt-to-income ratio, preferably below 28%, despite having a mix of credit types indicates
the ability to manage credit. Having most of one’s credit consist of credit from indirect lenders, such as
department stores and rent-to-own stores, may not be viewed as favorably in some credit scoring models as
credit from direct lenders, such as banks and credit unions.
Firms that prepare or users that purchase credit scores can decide how much weight to apply to each factor, and
they may include additional predictive factors (e.g., information found on the credit application such as income and
employment history) in the calculations. The Equal Credit Opportunity Act, however, prohibits characteristics
such as race, sex, marital status, national origin, and religion from being used in credit scoring models.29
Information for consumers on how to improve and maintain a good credit score is available from the Consumer
Financial Protection Bureau (CFPB; see https://www.consumerfinance.gov/consumer-tools/credit-reports-and-
scores/).
Consumer Protections and Regulation of the Credit
Reporting System
This section provides a brief overview of existing consumer protections and regulations related to
credit reporting. Consumers generally do not choose to participate in the credit reporting system.

26 See Fair Isaac, “What’s in My FICO Scores: How My FICO Scores Are Calculated,” http://www.myfico.com/
crediteducation/whatsinyourscore.aspx; and Federal Reserve, “Credit Reports and Credit Score,”
https://www.federalreserveconsumerhelp.gov/en/learnmore/credit-reports-and-scores.
27 CFPB, “What Effect Will Shopping for an Auto Loan Have on My Credit?,” June 6, 2016,
https://www.consumerfinance.gov/ask-cfpb/what-effect-will-shopping-for-an-auto-loan-have-on-my-credit-en-763/.
28 See Federal Reserve, “Permissible Purposes of Consumer Reports (FRCA, Section 604) and Investigative Consumer
Reports (FRCA, Section 606),” http://www.federalreserve.gov/boarddocs/supmanual/cch/200611/fcra.pdf; CFPB, Key
Dimensions and Processes in the U.S. Credit Reporting System, December 2012, p. 9, http://files.consumerfinance.gov/
f/201212_cfpb_credit-reporting-white-paper.pdf; and BankersOnline, “New Rules for Prescreening,” March 1, 1997,
https://www.bankersonline.com/articles/103643.
29 P.L. 93-495, Title 5, 88 Stat. 1520; 15 U.S.C. §1691 et seq.
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For this reason, consumer protection laws and regulations may be particularly consequential. The
Fair Credit Reporting Act (FCRA; 15 U.S.C. §1681), enacted in 1970 and implemented by
Regulation V, is the main statute regulating the credit reporting industry. The FCRA requires “that
consumer reporting agencies adopt reasonable procedures for meeting the needs of commerce for
consumer credit, personnel, insurance, and other information in a manner which is fair and
equitable to the consumer, with regard to the confidentiality, accuracy, relevancy, and proper
utilization of such information.”30 The FCRA establishes consumers’ rights in relation to their
credit reports, as well as permissible uses of credit reports. It also imposes certain responsibilities
on those who collect, furnish, and use the information contained in consumers’ credit reports.
The FCRA includes consumer protection provisions. Under the FCRA, a consumer must be told
when his or her information from a CRA has been used after an adverse action (generally a denial
of credit) has occurred, and disclosure of that information must be made free of charge.31 A
consumer has a right to one free credit report every year (from each of the three largest
nationwide credit reporting providers) even in the absence of an adverse action (e.g., credit
denial).32 Consumers also have the right to dispute inaccurate or incomplete information in their
reports. After a consumer alerts a CRA of such a discrepancy, the CRA must investigate and
correct errors, usually within 30 days. The FCRA also limits the length of time negative
information may remain on reports. Debts in collections typically stay on credit reports for seven
years, even if the consumer pays in full the item in collection. Personal bankruptcies stay on
credit reports for 10 years.33
The 2010 Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank; P.L. 111-
203) established the CFPB, consolidating many federal consumer financial protection powers
from other federal agencies. The CFPB has rulemaking and enforcement authorities over all
CRAs for certain consumer protection laws. It has supervisory authority, or the authority to
conduct examinations, over the larger CRAs. In July 2012, the CFPB announced that it would
supervise CRAs with $7 million or more in annual receipts, which at that time included 30 firms
representing approximately 94% of the market.34
The CFPB conducts examinations of the CRAs, reviewing procedures and operating systems
regarding the management of consumer data and enforcing applicable laws. In 2017, the CFPB
released a report of its supervisory work in the credit reporting system.35 The report discusses the
CFPB’s efforts to work with credit bureaus and financial firms to improve credit reporting in
three specific areas: data accuracy, dispute handling and resolution, and furnisher reporting. As
the report describes, credit bureaus and financial firms have developed data governance and
quality control programs to monitor data accuracy through working with the CFPB. In addition,

30 15 U.S.C. §1681.
31 See CFPB, A Summary of Your Rights Under the Fair Credit Reporting Act, https://files.consumerfinance.gov/f/
documents/bcfp_consumer-rights-summary_2018-09.pdf.
32 As of August 2023, Equifax, Experian, and TransUnion are offering free weekly online credit reports. See
https://www.annualcreditreport.com/index.action.
33 CFPB, “How Long Does Negative Information Remain on My Credit Report?,” September 1, 2020,
https://www.consumerfinance.gov/ask-cfpb/how-long-does-negative-information-remain-on-my-credit-report-en-323/.
34 CFPB, “CFPB to Supervise Credit Reporting,” July 16, 2012, https://www.consumerfinance.gov/about-us/
newsroom/consumer-financial-protection-bureau-to-superivse-credit-reporting/.
35 CFPB, Supervisory Highlights Consumer Reporting Special Edition, 2017, https://files.consumerfinance.gov/f/
documents/201703_cfpb_Supervisory-Highlights-Consumer-Reporting-Special-Edition.pdf.
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the CFPB has encouraged credit bureaus to improve their dispute and resolution processes,
including making it easier and more informative for consumers.36
Congress has also been interested in improving consumer protections in the credit reporting
system, particularly in response to the 2017 Equifax data breach, which exposed personal
information of millions of consumers.37 The 2018 Economic Growth, Regulatory Relief, and
Consumer Protection Act (P.L. 115-174) established new consumer protections related to credit
reporting, including the right to a free credit freeze. Credit freezes allow consumers to protect
themselves from fraud and identity theft by stopping new credit from being opened in their
names.
Policy Issues
Policymakers continue to debate the legal and regulatory framework around the credit reporting
system, including whether the scope of the FCRA should be expanded.38 For example, the CFPB
recently announced that it is considering whether to amend Regulation V to update credit
reporting regulations.39 These new regulations may clarify whether new types of data brokers are
subject to the FCRA as CRAs and what kinds of information constitute a credit report.40 The
CFPB is also considering whether to clarify how medical debts should be included in credit
reports, which is discussed in more detail later in this report.41 In addition, a recent Government
Accountability Office (GAO) report highlights the use of consumer scores outside of FCRA
purposes and suggests that Congress consider whether the FCRA or other consumer protection
laws should be expanded.42

36 The credit bureaus’ efforts to make disputes easier and more informative for consumers include (1) online portals to
submit disputes and upload attachments of supporting documentation; (2) improvements to their call center scripts and
training regarding solicitation of relevant information from consumers with disputes; (3) no longer requiring that
consumers obtain or purchase recent consumer reports before investigations; and (4) notice to consumers of dispute
results, including investigation results. See CFPB, Supervisory Highlights Consumer Reporting Special Edition, pp. 9-
11.
37 Equifax, “Equifax Announces Cybersecurity Incident Involving Consumer Information,” press release, September 7,
2017, https://www.equifaxsecurity2017.com/updates//-/announcements/a-progress-update-for-consumers.
38 In addition, FCRA compliance issues continue to occur. For example, a more recent 2019 CFPB supervisory report
on consumer reporting discussed new violations and compliance management system weaknesses related to FCRA
compliance. See CFPB, Supervisory Highlights Consumer Reporting Special Edition, Issue 20, December 2019,
https://files.consumerfinance.gov/f/documents/cfpb_supervisory-highlights_issue-20_122019.pdf.
39 CFPB, Fair Credit Reporting Act Rulemaking, Pre-Rule Activity, Fall 2022, https://www.reginfo.gov/public/do/
eAgendaViewRule?pubId=202210&RIN=3170-AA54. Pre-rule activity may include the following CFPB request for
information: CFPB, “Request for Information Regarding Data Brokers and Other Business Practices Involving the
Collection and Sale of Consumer Information,” 88 Federal Register 16951-16954, March 21, 2023; and CFPB, Small
Business Review Panel for Consumer Reporting Rulemaking, https://www.consumerfinance.gov/rules-policy/small-
business-review-panels/small-business-review-panel-for-consumer-reporting-rulemaking/.
40 CFPB, “Remarks of CFPB Director Rohit Chopra at White House Roundtable on Protecting Americans from
Harmful Data Broker Practices,” August 15, 2023, https://www.consumerfinance.gov/about-us/newsroom/remarks-of-
cfpb-director-rohit-chopra-at-white-house-roundtable-on-protecting-americans-from-harmful-data-broker-practices/;
and CFPB, Small Business Advisory Review Panel for Consumer Reporting Rulemaking: Outline of Proposals and
Alternatives Under Consideration, September 15, 2023, pp. 7-14, https://files.consumerfinance.gov/f/documents/
cfpb_consumer-reporting-rule-sbrefa_outline-of-proposals.pdf.
41 CFPB, “CFPB Kicks Off Rulemaking to Remove Medical Bills from Credit Reports,” press release, September 21,
2023, https://www.consumerfinance.gov/about-us/newsroom/cfpb-kicks-off-rulemaking-to-remove-medical-bills-from-
credit-reports/.
42 GAO, Consumer Protection: Congress Should Consider Enhancing Protections Around Scores Used to Rank
Consumers, GAO-22-104527, May 2022, https://www.gao.gov/assets/gao-22-104527.pdf.
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This section examines selected policy issues pertaining to the use of credit reports and scores in
consumer lending and other decisions. Specifically, the report addresses policy issues concerning
(1) inaccurate or disputed consumer information in consumer data reports; (2) consumers’ rights
in the credit reporting system; (3) whether and how medical debt should be included in credit
reports; (4) whether uses of credit bureau data outside of the financial services, such as for
employment or rental decisions, should be limited; (5) whether the use of alternative consumer
data may increase accuracy and credit access; and (6) how to address data protection and security
issues in consumer data reporting.
Inaccurate or Disputed Information
Inaccurate information in a credit report may limit a consumer’s access to credit or increase the
costs to the consumer of obtaining credit. Credit reporting inaccuracies may occur for various
reasons. Furnishers may inadvertently input inaccurate information into their databases. Matching
information to the proper individual poses challenges, such as in cases when multiple individuals
have similar names and spellings or if individuals change their names. In some cases, the
information may be properly matched, but the individual could be a victim of fraud or identity
theft. The predictive power of consumer data, or the ability to accurately predict a consumer’s
likelihood to default on a loan, would be enhanced to the extent that consumer information is
regularly updated.
The accuracy of consumer information in consumer data reports has been an ongoing policy
concern. In 2012, the Federal Trade Commission (FTC) reported that 26% of participants in a
survey of credit report accuracy were able to identify at least one potentially material error on at
least one of approximately three different credit reports prepared using their consumer
information.43 After the reports were corrected, 13% of participants in the FTC study saw one or
more of their credit scores increase. For those who saw an increase, over 40% of their scores rose
by more than 20 points, which could increase the likelihood that the consumer would be offered
less expensive credit terms. More recent studies have found similar results.44
In recent years, legal and regulatory developments have encouraged the CRAs to make changes
to improve accuracy in credit reports. As mentioned in the previous section, the CFPB has
reported its actions to encourage credit bureaus and financial firms to improve data accuracy in
credit reporting. In addition, in response to a 2015 settlement between the nationwide CRAs and
over 30 state attorneys general, the National Consumer Assistance Plan was launched to increase
accuracy in consumer credit reports.45 According to the CFPB, this led to the removal of most
civil judgments and half of all tax liens in credit reports for the nationwide CRAs.46 Some
research suggests that while the removal of this information may have benefited the consumers
whose information was removed, the removal of these large categories of information may also
have had distributional impacts on the allocation of credit for consumers. For example, one study
found that when non-bankruptcy public records were removed from credit reports, consumers

43 See FTC, Report to Congress Under Section 319 of the Fair and Accurate Credit Transactions Act of 2003,
December 2012, https://www.ftc.gov/sites/default/files/documents/reports/section-319-fair-and-accurate-credit-
transactions-act-2003-fifth-interim-federal-trade-commission/130211factareport.pdf.
44 Syed Ejaz, “A Broken System: How the Credit Reporting System Fails Consumers and What to Do About It,”
Consumer Reports, June 10, 2021, p. 4, https://advocacy.consumerreports.org/wp-content/uploads/2021/06/A-Broken-
System-How-the-Credit-Reporting-System-Fails-Consumers-and-What-to-Do-About-It.pdf.
45 Claire Brennecke, Jasper Clarkberg, and Michelle Kambara, Public Records, Credit Scores, and Credit Performance,
CFPB, December 2019, p. 2, https://files.consumerfinance.gov/f/documents/cfpb_quarterly-consumer-credit-
trends_public-records-credit-scores-performance_2019-12.pdf.
46 Brennecke, Clarkberg, and Kambara, Public Records, Credit Scores, and Credit Performance, p. 2.
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who previously had this information on their credit reports may look like they have similar credit
records as other consumers, although on average, they were more likely to default in the future.47
Therefore, lenders reduced credit to these groups, and consumers who previously did not have
non-bankruptcy public records on their credit reports may have experienced a decrease in their
access to credit. Therefore, there may be trade-offs between ensuring accuracy, encouraging
information furnishing, and the allocation of access of credit for consumers.
Consumer Disputes
The accuracy of credit reports depends in part on consumers to monitor and dispute any
discrepancies. While consumers have the right in the FCRA to dispute inaccurate or incomplete
information in their reports, issues with the dispute process may exist. In addition, in 2022, the
CFPB found some CRAs failing to conduct reasonable dispute investigations, deleting
information rather than investigating for accuracy, and not following up appropriately with
consumers.48 In addition, CFPB research found that disputes are generally more common on
credit reports for consumers who live in majority Black and Hispanic neighborhoods, younger
consumers, and consumers with lower credit scores.49
The CFPB receives more complaints about credit reporting than for any other industry it
regulates. In 2022, for example, more than three quarters of complaints that the agency received
were about credit reporting, most frequently about the three nationwide CRAs.50 In 2020 and
2021, consumer complaints submitted to the CFPB about Experian, Transunion, and Equifax
increased dramatically.51 The CFPB attributes some of these complaints to an automated system
causing information disputes not to be addressed quickly and consumers spending lots of time
fixing errors.52 The CFPB found that in 2020, the nationwide CRAs changed how they responded
to consumer complaints, which included not responding when they suspected that a third party
such as a credit repair company had submitted a complaint on behalf of the consumer.53 The
nationwide CRAs have identified credit repair companies as a challenge to their dispute
processes, claiming that they submit a large volume of illegitimate disputes, harming the quality
of their information about consumers.54 Some argue that credit repair companies may be
disputing correct yet negative information, claiming it is fraudulent or incorrectly reported, in
order to increase consumers’ credit scores.55 In 2022, while the number of CFPB complaints from
consumers remained elevated, the CFPB reported that complaint responses from the nationwide

47 Scott L. Fulford and Éva Nagypál, “The Equilibrium Effect of Information in Consumer Credit Markets: Public
Records and Credit,” CFPB, Office of Research, Working Paper No. 23-03, April 2023, https://papers.ssrn.com/sol3/
papers.cfm?abstract_id=4419376.
48 CFPB, Supervisory Highlights, May 2022, pp. 6-11, https://files.consumerfinance.gov/f/documents/
cfpb_supervisory-highlights_issue-26_2022-04.pdf.
49 Ryan Sandler, Disputes on Consumer Credit, CFPB, October 2021, https://files.consumerfinance.gov/f/documents/
cfpb_disputes-on-consumer-credit-reports_report_2021-11.pdf.
50 CFPB, Consumer Response Annual Report: January 1-December 31, 2022, March 2023, p. 3,
https://s3.amazonaws.com/files.consumerfinance.gov/f/documents/cfpb_2022-consumer-response-annual-report_2023-
03.pdf.
51 CFPB, Annual Report of Credit and Consumer Reporting Complaints: An Analysis of Complaint Responses by
Equifax, Experian, and TransUnion, January 2022, p. 23, https://files.consumerfinance.gov/f/documents/cfpb_fcra-
611-e_report_2022-01.pdf.
52 CFPB, Annual Report of Credit and Consumer Reporting Complaints, pp. 3-4.
53 CFPB, Annual Report of Credit and Consumer Reporting Complaints, p. 4.
54 CFPB, Annual Report of Credit and Consumer Reporting Complaints, p. 19.
55 AnnaMaria Andriotis, “Deluge of Fraud Claims Adds to Concerns About Credit Scores,” Wall Street Journal,
December 1, 2022, https://www.wsj.com/articles/credit-score-washing-identity-theft-11669848797.
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CRAs were more substantive and tailored and more likely to contain consumer relief, fixing some
of these past issues.56
A 2019 GAO report argues that the CFPB should better define its expectations around accuracy
and reasonable investigations.57 In particular, it describes consumer report accuracy issues
primarily caused by consumer matching challenges due to inaccurate personally identifiable
information and errors in furnished information. For consumer dispute investigations, GAO
recommends that the CFPB provide more clarity on investigation obligations for CRAs. Since the
GAO report was released, the CFPB published guidance about the inadequacy of name-only
matching procedures58 and inconsistent information in credit reports,59 as well as dispute
investigation requirements, such as providing the furnisher all of the information in a consumer’s
dispute and not limiting how a consumer can request an investigation with the CRAs.60 The
agency also issued guidance on consumer privacy and permissible purposes for accessing a credit
report.61 The CFPB is considering proposals to clarify dispute processes in its current credit
reporting rulemaking.62
Consumer Rights in the Credit Reporting System
Consumers sometimes find it difficult to advocate for themselves when credit reporting issues
arise because they are not aware of their rights and how to exercise them. According to a CFPB
report, some consumers are confused about what credit reports and scores are, find it challenging
to obtain credit reports and scores, and struggle to understand the contents of their credit reports.63
Currently, the CFPB provides financial education resources on its website to help educate
consumers about their rights regarding consumer reporting.64 The credit bureaus’ websites also
provide information about how to dispute inaccurate information and how consumers can contact
them by phone or mail.
Special populations have unique needs in the credit reporting system. For example, active-duty
military may move more frequently than civilians do and spend time in war zones, making them
more vulnerable to identity theft.65 Thus, policymakers have considered whether servicemembers

56 CFPB, Annual Report of Credit and Consumer Reporting Complaints: An Analysis of Complaint Responses by
Equifax, Experian, and TransUnion, January 2023, https://files.consumerfinance.gov/f/documents/cfpb_fcra-611-
e_report_2023-01.pdf.
57 GAO, Consumer Reporting Agencies: CFPB Should Define Its Supervisory Expectations, GAO-19-459, July 2019,
https://www.gao.gov/assets/gao-19-459.pdf.
58 CFPB, “Fair Credit Reporting; Name-Only Matching Procedures,” 86 Federal Register 62468-62472, November 10,
2021.
59 CFPB, “Fair Credit Reporting; Facially False Data,” 87 Federal Register 64689-64693, October 26, 2022.
60 CFPB, “Consumer Financial Protection Circular 2022-07: Reasonable Investigation of Consumer Reporting
Disputes,” https://www.consumerfinance.gov/compliance/circulars/consumer-financial-protection-circular-2022-07-
reasonable-investigation-of-consumer-reporting-disputes/.
61 CFPB, “Fair Credit Reporting; Permissible Purposes for Furnishing, Using, and Obtaining Consumer Reports,” 87
Federal Register 41243-41246, July 12, 2022.
62 CFPB, Small Business Advisory Review Panel for Consumer Reporting Rulemaking: Outline of Proposals and
Alternatives Under Consideration, September 15, 2023, pp. 15-17, https://files.consumerfinance.gov/f/documents/
cfpb_consumer-reporting-rule-sbrefa_outline-of-proposals.pdf.
63 CFPB, Consumer Voices on Credit Reports and Scores, February 2015, https://files.consumerfinance.gov/f/
201502_cfpb_report_consumer-voices-on-credit-reports-and-scores.pdf.
64 For example, see CFPB, “Credit Reports and Scores,” https://www.consumerfinance.gov/consumer-tools/credit-
reports-and-scores/.
65 CFPB, “Credit Reporting Companies Should Do More to Ensure That Servicemembers Receive the Free Credit
(continued...)
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should have rights to additional credit reporting protections. For example, active-duty military
consumers are entitled to place active-duty alerts in their credit reports to notify creditors and
other credit report users.66 In addition, victims of human trafficking may have credit reports that
include adverse information resulting from their being trafficked. Responding to this concern, in
December 2021, Congress passed new language prohibiting credit reporting companies from
including negative information that resulted from human trafficking to be included in consumers’
credit reports, providing new credit reporting protections for these victims.67
Medical Debt and Credit Reports68
When a consumer defaults on a debt, a third-party debt collector—rather than the lender (or
medical provider) to whom the debt is originally owed—often collects the debt obligation.69
Debts in collection, including medical debts in collection, can be reported to credit bureaus and
appear on consumers’ credit reports. Medical debts are the most commonly reported type of debt
collection on credit reports. According to the CFPB, in 2021, medical debts constituted 58% of
debts reported in collection.70 Medical debts reported to the credit bureaus tend to be for
relatively small amounts and may be more likely to be reported than are other types of debts.
According to the CFPB, most medical debts reported are under $500.71
Inconsistencies associated with medical billing can lead to inconsistencies in credit reporting.
Medical debts are often transferred to debt collectors after different periods of time, depending on
the medical provider. Health insurance disputes can cause the consumer to be unaware of a
medical debt in collection.72 Some medical providers may offer financial assistance programs,
complicating the medical billing process for consumers.73 In addition, debt collectors can decide
whether or when to report debts to CRAs. Therefore, medical debts can appear on people’s credit
reports inconsistently. Perhaps for these reasons, CFPB research has found that medical debts
may be a less reliable predictor of future credit performance than other debts are.74 While some

Monitoring Services They Are Legally Entitled To,” April 27, 2023, https://www.consumerfinance.gov/about-us/blog/
credit-reporting-companies-servicemembers-receive-free-credit-monitoring-legally-entitled-to/.
66 15 U.S.C. §1681c-1.
67 P.L. 117-81, §6102. This provision is implemented by CFPB, “Prohibition on Inclusion of Adverse Information in
Consumer Reporting in Cases of Human Trafficking (Regulation V),” 87 Federal Register 37700, July 25, 2022.
68 For more information on medical debt, see, CRS In Focus IF12169, An Overview of Medical Debt Collection, Credit
Reporting, and Related Policy Issues, by Cheryl R. Cooper.
69 For more information on debt collection, see CRS Report R46477, The Debt Collection Market and Selected Policy
Issues, by Cheryl R. Cooper.
70 CFPB, Medical Debt Burden in the United States, February 2022, https://files.consumerfinance.gov/f/documents/
cfpb_medical-debt-burden-in-the-united-states_report_2022-03.pdf.
71 CFPB, Medical Debt Burden in the United States.
72 Consumers also complain to the CFPB about disputed, inaccurate, or not-owed medical debts on credit reports. For
more information on medical debt complaints to the CFPB, see CFPB, Complaint Bulletin: Medical Billing and
Collection Issues Described in Consumer Complaints, April 2022, https://files.consumerfinance.gov/f/documents/
cfpb_complaint-bulletin-medical-billing_report_2022-04.pdf.
73 For more background on financial assistance for medical care and medical debt reported to the CRAs, see Susan
Singer, Eric Wilson, and Tavi Carare, Understanding Required Financial Assistance in Medical Care, CFPB, July 28,
2022, https://www.consumerfinance.gov/data-research/research-reports/understanding-required-financial-assistance-in-
medical-care/; and Octavian Carare, Susan Singer, and Eric Wilson, Exploring the Connection Between Financial
Assistance for Medical Care and Medical Collections, CFPB, August 24, 2022, https://www.consumerfinance.gov/
about-us/blog/exploring-connection-between-financial-assistance-for-medical-care-and-medical-collections/.
74 See Kenneth P. Brevoort and Michelle Kambara, Data Point: Medical Debt and Credit Scores, CFPB, May 2014,
http://files.consumerfinance.gov/f/201405_cfpb_report_data-point_medical-debt-credit-scores.pdf.
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newer credit scoring models take this into account, older or in-house models are still used by the
financial industry and could impact consumers with medical debt.75
In 2022, there were significant policy and market developments related to medical debt. In March
2022, the three nationwide credit bureaus—Experian, Equifax, and TransUnion—jointly made the
following announcements:
• Paid medical debts will no longer be included on credit reports for consumers;
• Medical debts that are less than a year old will no longer be included on credit
reports for consumers in order to give consumers time to work with insurance
companies and medical providers to settle the debt; and
• Beginning in the first half of 2023, medical debts under $500 will no longer be
included on credit reports for consumers.76
The credit bureaus believe that these actions will remove almost 70% of medical debts from
consumer credit reports.77 CFPB research estimates that about half of consumers with medical
debt on their credit reports prior to the announced changes will no longer have any medical debts
included in their credit reports and that consumers will experience additional access to credit now
that this change is going into effect.78
In December 2020, Congress passed the No Surprises Act, part of the Consolidated
Appropriations Act, 2021 (P.L. 116-260, Division BB, Title I), to address surprise medical bills—
for example, out-of-network emergency bills. After this law went into effect, the CFPB released a
bulletin stating that if debt collectors report debts barred by the No Surprises Act, they may
violate the FCRA.79
In April 2022, the Biden Administration announced that (1) the Department of Health and Human
Services would do a study of more than 2,000 health care providers to evaluate how billing
practices impact the affordability of care and accumulation of medical debt; (2) the
Administration would direct all federal agencies not to consider medical debt in underwriting
their credit programs, such as for mortgages and small business loans; (3) the Department of
Veterans Affairs would make their medical debt forgiveness process easier and stop reporting
medical debt to credit bureaus; and (4) the CFPB would increase its education materials around
medical debt.80

75 CFPB, Medical Debt Burden in the United States.
76 TransUnion, “Equifax, Experian, and TransUnion Support U.S. Consumers with Changes to Medical Collection Debt
Reporting,” press release, March 18, 2022, https://newsroom.transunion.com/equifax-experian-and-transunion-support-
us-consumers-with-changes-to-medical-collection-debt-reporting/.
77 TransUnion, “Equifax, Experian, and TransUnion.”
78 Alyssa Brown and Eric Wilson, Data Point: Consumer Credit and the Removal of Medical Collections from Credit
Reports, CFPB, April 2023, https://files.consumerfinance.gov/f/documents/cfpb_consumer-credit-removal-medical-
collections-from-credit-reports_2023-04.pdf; and Lucas Nathe and Ryan Sandler, Paid and Low-Balance Medical
Collections on Consumer Credit Reports, CFPB, July 27, 2022, https://www.consumerfinance.gov/data-research/
research-reports/paid-and-low-balance-medical-collections-on-consumer-credit-reports/.
79 CFPB, “Bulletin 2022-01: Medical Debt Collection and Consumer Reporting Requirements in Connection with the
No Surprises Act,” 87 Federal Register 3025-3026, January 20, 2022.
80 The White House, “Fact Sheet: The Biden Administration Announces New Actions to Lessen the Burden of Medical
Debt and Increase Consumer Protection,” press release, April 11, 2022, https://www.whitehouse.gov/briefing-room/
statements-releases/2022/04/11/fact-sheet-the-biden-administration-announces-new-actions-to-lessen-the-burden-of-
medical-debt-and-increase-consumer-protection/.
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In September 2023, the CFPB announced that it is considering proposals in its rulemaking to
limit the reporting of medical debts on credit reports.81 For example, the CFPB is considering
prohibiting medical debts “on consumer reports furnished to creditors for purposes of making
credit eligibility determinations.” Alternatively, the CFPB is also considering proposals to allow
medical debts on credit reports but mandating a delay in furnishing medical debts or not allowing
medical debts below a particular dollar amount to be furnished.
Some believe it is unfair for any medical debts to appear on credit reports, because these debts are
often incurred for medically necessary reasons and are less likely to indicate whether someone is
financially responsible. Moreover, health insurance disputes can take time to resolve. For these
reasons, some argue that the credit bureaus should be prohibited from including debts related to
medically necessary procedures in credit reports and from including medical debts that are less
than a year old or paid. While the three nationwide credit bureaus may limit medical debt
reporting voluntarily, some argue that these changes should be required by law and should apply
to all credit bureaus. Others argue that medical debts may demonstrate consumers’ credit risk and
should therefore be included in credit reports.
Use of Credit Reports for Employment Decisions and Tenant
Screening
According to the FCRA, consumer credit reports can be used in specific permissible ways beyond
lenders using them to evaluate loan applications.82 For example, some employers use credit
reports or background screening companies to evaluate job applicants for job openings.83 Many
landlords may use credit and other information to help decide whether to rent to an individual or
household, including what is sometimes called a tenant screening report. These reports may have
information from the nationwide CRAs, as well as possibly other information, such as past rental
history or criminal records.84 To comply with the FCRA, employers and landlords must inform an
applicant that his or her credit report is a part of the decision and acquire the applicant’s written
permission to obtain the report. If an applicant is denied a job or apartment due to information on
a credit report, then the applicant must be given a copy of the report and a summary of his or her
FCRA rights. Some states limit or place additional regulations around the use of credit
information for these types of decisions.85

81 CFPB, Small Business Advisory Review Panel for Consumer Reporting Rulemaking: Outline of Proposals and
Alternatives Under Consideration, September 15, 2023, pp. 17-19, https://files.consumerfinance.gov/f/documents/
cfpb_consumer-reporting-rule-sbrefa_outline-of-proposals.pdf.
82 15 U.S.C. §1681b.
83 According to the Society for Human Resource Management, in 2012, almost half of surveyed organizations in its
membership used credit background checks on some of their job applications. Employers report that they use this
information to reduce the likelihood of employee theft or embezzlement and to reduce legal liability for negligent
hiring. See Society for Human Resource Management, “Background Checking—The Use of Credit Background
Checks in Hiring Decisions,” August 27, 2012, https://blog.shrm.org/trends/background-checkingthe-use-of-credit-
background-checks-in-hiring-decisions.
84 CFPB, “Errors in Your Tenant Screening Report Shouldn’t Keep You from Finding a Place to Call Home,” July 1,
2021, https://www.consumerfinance.gov/about-us/blog/errors-in-your-tenant-screening-report-shouldnt-keep-you-
from-finding-a-place-to-call-home/.
85 For example, see Rosemarie Lally, “Using Workers’ Credit Information Increasingly Prohibited,” Society for Human
Resource Management, July 28, 2015, https://www.shrm.org/resourcesandtools/legal-and-compliance/state-and-local-
updates/pages/states-credit-history.aspx.
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The CFPB has highlighted many issues in the tenant screening market.86 Incorrect or outdated
information in tenant screening reports are a significant issue that may make it difficult for some
consumers to find housing.87 Some of the data that tenant screening reports regularly use, such as
eviction records, may have data quality issues.88 While the National Consumer Assistance Plan
(discussed earlier in this report) led to the removal of most court records in nationwide CRAs’
credit reports due to accuracy concerns, this did not apply to many tenant screening companies.
Even if a consumer is able to fix errors in a tenant screening report, the apartment may get rented
to somebody else before the errors are fixed, especially in a competitive rental market. Moreover,
CFPB research highlights how consumers may know less about the tenant screening industry and
have less awareness about how to get issues with their information addressed compared to the
nationwide CRAs.89 For these reasons, the CFPB has recently issued guidance related to tenant
screening report accuracy90 and issued a request for information along with the FTC.91
Policy questions are related to whether and under what conditions it is appropriate to use
consumer reports or credit bureau data outside of extending credit to consumers, including in
employment or rental decisions. While this information may better inform employers or landlords
before making employment or rental decisions, it could also disadvantage some consumers.
Because many employment and tenant screening companies exist, a consumer may not be aware
of an error in his or her consumer report until after a denial of employment or an apartment.
Therefore, it may be more difficult for consumers to assert their FCRA rights, and incorrect
information issues may be more likely to reoccur, harming some consumers. For these reasons,
some argue that the CFPB should prioritize supervising for accuracy in these markets or that
consumer report information should not be allowed to be used for these purposes.
Alternative Data in Credit Reports92
The CFPB estimates that credit scores cannot be generated for approximately 20% of the U.S.
population due to their limited credit histories.93 The CFPB distinguishes between different types

86 CFPB, “CFPB Reports Highlight Problems with Tenant Background Checks,” November 15, 2022,
https://www.consumerfinance.gov/about-us/newsroom/cfpb-reports-highlight-problems-with-tenant-background-
checks/.
87 CFPB, Consumer Snapshot: Tenant Background Checks, November 2022, https://files.consumerfinance.gov/f/
documents/cfpb_consumer-snapshot-tenant-background-check_2022-11.pdf.
88 CFPB, Tenant Background Checks Market, November 2022, pp. 26-32, https://files.consumerfinance.gov/f/
documents/cfpb_tenant-background-checks-market_report_2022-11.pdf.
89 CFPB, Consumer Snapshot: Tenant Background Checks, p. 21.
90 CFPB, “CFPB Takes Action to Stop False Identification by Background Screeners,” press release, November 4,
2021, https://www.consumerfinance.gov/about-us/newsroom/cfpb-takes-action-to-stop-false-identification-by-
background-screeners/; and CFPB, “As Federal Eviction Protections Come to an End, CFPB Warns Landlords and
Consumer Reporting Agencies to Report Rental Information Accurately,” press release, July 1, 2021,
https://www.consumerfinance.gov/about-us/newsroom/as-federal-eviction-protections-come-to-an-end-cfpb-warns-
landlords-and-consumer-reporting-agencies-to-report-rental-information-accurately/.
91 FTC, “FTC and CFPB Seek Public Comment on How Background Screening May Shut Renters out of Housing,”
press release, February 28, 2023, https://www.ftc.gov/news-events/news/press-releases/2023/02/ftc-cfpb-seek-public-
comment-how-background-screening-may-shut-renters-out-housing; and White House, “Fact Sheet: Biden-⁠Harris
Administration Announces New Actions to Protect Renters and Promote Rental Affordability,” January 25, 2023,
https://www.whitehouse.gov/briefing-room/statements-releases/2023/01/25/fact-sheet-biden-harris-administration-
announces-new-actions-to-protect-renters-and-promote-rental-affordability/.
92 For more information on alternative data in financial services, see CRS In Focus IF11630, Alternative Data in
Financial Services, by Cheryl R. Cooper.
93 For more information on credit access policy issues, see CRS Report R45979, Financial Inclusion and Credit Access
Policy Issues, by Cheryl R. Cooper.
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of consumers with limited credit histories.94 One category of consumers, referred to as credit
invisibles, have no credit record at the three largest credit bureaus and, thus, do not exist for the
purposes of credit reporting. This group represents 11.0% of the U.S. adult population, or 26
million consumers. Another category of consumers do have credit records, but they still cannot be
scored and are considered nonscorable.95 According to the CFPB, nonscorable consumers
represent about 8.3% of the U.S. adult population, or approximately 19 million consumers.
Younger adults may be more likely to be a part of the credit invisible or nonscorable population
because they lack sufficient credit histories.96
Alternative data generally refers to information used to determine a consumer’s creditworthiness
that the nationwide CRAs do not regularly include in traditional credit files.97 New technology
makes it possible for financial institutions to gather other information, including financial and
nonfinancial data, from a variety of sources. In 2017, the CFPB included examples of alternative
data, such as payments on telecommunications, rent, or utilities; checking account transaction
information; educational or occupational attainment; how consumers shop, browse, or use
devices; and social media information.98
These data can be used either in credit reports or by lenders directly to underwrite loans.
Alternative data could potentially be used to expand access to credit consumers, particularly
consumers without extensive credit histories, such as young people and immigrants. Recent
findings suggest that some types of alternative data—such as education, employment, and cash-
flow information—might expand access to credit or make credit cheaper for some consumers.99
For example, analysis of a private credit model that uses alternative data to make credit and
pricing decisions suggests that the model expands the number of consumers approved for credit;
lowers the rate consumers pay for credit on average; and does not increase disparities based on
race, ethnicity, gender, or age.100 Another recent study suggests that cash-flow data may more

94 See Kenneth P. Brevoort, Philipp Grimm, and Michelle Kambara, Data Point: Credit Invisibles, CFPB, May 2015,
http://files.consumerfinance.gov/f/201505_cfpb_data-point-credit-invisibles.pdf.
95 Because credit scoring models vary by firms, consumers who cannot be scored by some models might still be scored
by other models. Thus, being nonscorable may depend upon the credit reporting data records and scoring models used.
96 The CFPB estimated some additional information about these groups by age, income, and race. See Brevoort,
Grimm, and Kambara, Data Point: Credit Invisibles.
97 Consumers could also potentially build credit histories by using credit building loans, such as secured credit cards, or
through the reporting of new credit products, such as “Buy Now, Pay Later” finance products. For more information on
the impact of credit builder loans, see CFPB, “Targeting Credit Builder Loans: Insights from a Credit Builder Loan
Evaluation,” July 2020, https://www.consumerfinance.gov/data-research/research-reports/targeting-credit-builder-
loans/. For more information on credit reporting “Buy Now, Pay Later” finance products, see Martin Kleinbard and
Laura Udis, “Buy Now, Pay Later and Credit Reporting,” CFPB, June 15, 2022, https://www.consumerfinance.gov/
about-us/blog/by-now-pay-later-and-credit-reporting/.
98 CFPB, “Request for Information Regarding Use of Alternative Data and Modeling Techniques in the Credit
Process,” 82 Federal Register 11185, February 21, 2017.
99 See Julapa Jagtiani and Catharine Lemieux, “The Roles of Alternative Data and Machine Learning in Fintech
Lending: Evidence from the LendingClub Consumer Platform,” Federal Reserve Bank of Philadelphia,
https://www.philadelphiafed.org/consumer-finance/the-roles-of-alternative-data-and-machine-learning-in-fintech-
lending; and Alexei Alexandrov, Alyssa Brown, and Samyak Jain, “Looking at Credit Scores Only Tells Part of the
Story—Cashflow Data May Tell Another Part,” CFPB, July 26, 2023, https://www.consumerfinance.gov/about-us/
blog/credit-scores-only-tells-part-of-the-story-cashflow-data/.
100 Patrice Ficklin and Paul Watkins, “An Update on Credit Access and the Bureau’s First No-Action Letter,” CFPB,
August 6, 2019, https://www.consumerfinance.gov/about-us/blog/update-credit-access-and-no-action-letter/; and
Marco Di Maggio, Dimuthu Ratnadiwakara, and Don Carmichael, “Invisible Primes: Fintech Lending with Alternative
Data,” NBER Working Paper Series, March 2020.
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accurately predict creditworthiness and that its use would expand credit access to more borrowers
while meeting fair lending rules.101
The collection and use of alternative data, however, raises various policy concerns related to data
security and consumer protection.102 In terms of using alternative data in consumer lending,
questions exist about how to comply with fair lending laws.103 In addition, some prospective
borrowers may be unaware that alternative data have been used in credit decisions, or such
information may be incorrect, raising privacy and consumer protection concerns. In an effort to
address such concerns, many consumer reporting agencies and firms currently use alternative data
only when consumers choose to participate (i.e., opt in or consumer-permissioned data).104
The CFPB and federal banking regulators have been monitoring alternative data developments in
recent years. In December 2019, they released a brief policy statement on the appropriate use of
alternative data in the underwriting process, highlighting the potential benefits and risks.105 The
release followed an October 2017 statement from the CFPB outlining nine principles for
consumer-authorized financial data sharing and aggregation. These principles included, among
other things, consumer access and usability, consumer control and informed consent, and data
security and accuracy.106

101 FinRegLab, “The Use of Cash-Flow Data in Underwriting Credit: Empirical Research Findings,” July 2019,
https://finreglab.org/wp-content/uploads/2019/07/FRL_Research-Report_Final.pdf.
102 For a longer discussion on the benefits and risks of alternative data to consumers, see CFPB, “Request for
Information Regarding Use of Alternative Data and Modeling Techniques in the Credit Process,” 82 Federal Register
11185-11188, February 21, 2017, https://www.federalregister.gov/documents/2017/02/21/2017-03361/request-for-
information-regarding-use-of-alternative-data-and-modeling-techniques-in-the-credit.
103 For example, the Equal Credit Opportunity Act (ECOA; 15 U.S.C. §§1691-1691f) generally prohibits discrimination
in credit transactions based upon certain protected classes, including sex, race, color, national origin, religion, marital
status, age, and “because all or part of the applicant’s income derives from any public assistance program.” ECOA has
historically been interpreted to prohibit both intentional discrimination and disparate impact discrimination, in which a
facially neutral business decision has a discriminatory effect on a protected class. Alternative data may pose fair
lending risks if they are correlated with ECOA-protected characteristics, such as race or ethnicity. In these cases,
lenders’ uses of alternative data to make credit decisions could result in disparate impacts. However, the Supreme
Court’s reasoning in a June 2015 decision involving the Fair Housing Act, another federal antidiscrimination law, has
sparked debate about whether disparate impact claims are covered under ECOA. For background on disparate impact
claims, see CRS Report R44203, Disparate Impact Claims Under the Fair Housing Act, by David H. Carpenter.
104 For example, FICO introduced the UltraFICO Score, a voluntary opt-in product that relies on bank account
transaction data. For more information, see FICO, “Introducing UltraFICO Score,” October 2, 2019,
https://www.fico.com/ultrafico/. For the unscorable population, FICO also developed FICO Score XD for bankcard
issuers by using landline phone, mobile phone, and cable payments history data. For more information, see FICO,
“FICO Score XD,” October 2, 2019, https://www.fico.com/en/products/fico-score-xd. Experian launched Experian
Boost, which allows consumers to include utility and telecom bill payments in their credit records. For more
information, see Stefan Lembo Stolba, “What Is Experian Boost?,” Experian, September 19, 2022,
https://www.experian.com/blogs/ask-experian/introducing-experian-boost/.
105 Federal Reserve, CFPB, Federal Deposit Insurance Corporation, National Credit Union Administration, and Office
of the Comptroller of the Currency, Interagency Statement on the Use of Alternative Data in Credit Underwriting,
December 3, 2019, https://files.consumerfinance.gov/f/documents/cfpb_interagency-statement_alternative-data.pdf.
106 CFPB, Consumer Protection Principles: Consumer-Authorized Financial Data Sharing and Aggregation, October
18, 2017, pp. 3-5, https://files.consumerfinance.gov/f/documents/cfpb_consumer-protection-principles_data-
aggregation.pdf.
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Data Protection and Security Issues
Congressional interest in data protection and security in the consumer data industry increased
following the 2017 Equifax data breach.107 CRAs are subject to the data protection requirements
of Section 501(b) of the Gramm-Leach-Bliley Act (GLBA; P.L. 106-102).108 Section 501(b)
requires the federal financial institution regulators to “establish appropriate standards for the
financial institutions subject to their jurisdiction relating to administrative, technical, and physical
safeguards—(1) to insure the security and confidentiality of consumer records and information;
(2) to protect against any anticipated threats or hazards to the security or integrity of such records;
and (3) to protect against unauthorized access or use of such records or information which could
result in substantial harm or inconvenience to any customer.”
The regulatory system established in GLBA splits responsibilities across multiple agencies.109 The
FTC issues the implementing rules, referred to as the Safeguards and Privacy Rules, that financial
institutions (including nonbank institutions like CRAs) are obligated to follow.110 However, for
CRAs, there is no agency with the authority to supervise for compliance with these rules. Further,
if a violation is discovered, then enforcement is also possible at many agencies. In March 2019,
GAO released a report that recommended actions for the FTC, the CFPB, and Congress to
strengthen oversight of credit bureaus’ data security.111
The Dodd-Frank Act granted the CFPB broad authorities to regulate and enforce for unfair,
deceptive, and abusive acts in consumer financial products or services.112 Recently, the CFPB
published guidance asserting that insufficient data protection or information security of sensitive
consumer data could be considered an unfair act or practice under the Consumer Financial
Protection Act.113
Consumers maintain consumer protection rights related to data protection and security of their
credit report data. Section 301 of the Economic Growth, Regulatory Relief, and Consumer
Protection Act (P.L. 115-174) requires credit bureaus to provide fraud alerts for consumer files for
at least one year under certain circumstances. In addition, it established the right to a free credit
freeze, which allows consumers to stop new credit from being opened in their name, to protect
themselves from fraud and identity theft. Currently, an identity theft victim may receive credit
monitoring from the company that housed data that was exposed as part of a breach. Credit

107 For more information, see CRS Testimony TE10021, Consumer Data Security and the Credit Bureaus, by Chris
Jaikaran.
108 See CRS Insight IN11199, Big Data in Financial Services: Privacy and Security Regulation, by Andrew P. Scott;
and CRS Report R44429, Financial Services and Cybersecurity: The Federal Role, by M. Maureen Murphy and
Andrew P. Scott.
109 GLBA delegated the authority for federal consumer privacy provisions to the federal banking regulators for
federally insured depository institutions; the Securities and Exchange Commission for brokers, dealers, investment
companies, and investment advisors; state insurance regulators for insurance companies; and the FTC for all other
financial institutions. See CRS Report R44429, Financial Services and Cybersecurity: The Federal Role, by M.
Maureen Murphy and Andrew P. Scott.
110 FTC, “Privacy of Consumer Financial Information,” 65 Federal Register 33646-33689, May 24, 2000.
111 GAO, Consumer Data Protection: Actions to Strengthen Oversight of Consumer Reporting Agencies, GAO-19-196,
February 2019, https://www.gao.gov/products/GAO-19-196.
112 12 U.S.C. §5531(a).
113 CFPB, “Consumer Financial Protection Circular 2022-04: Insufficient Data Protection or Security for Sensitive
Consumer Information,” August 11, 2022, https://www.consumerfinance.gov/compliance/circulars/circular-2022-04-
insufficient-data-protection-or-security-for-sensitive-consumer-information/.
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bureaus charge fees for these services, paid for by the private company after a data breach
incident or by consumers if they choose to subscribe to that service.
Appendix. Natural Disasters and the COVID-19
Pandemic
If consumers experience disruptions in their income following unexpected events, such as natural
disasters or a pandemic, they are more likely to be delinquent or default on loans and other
regularly scheduled payments. Lenders have various options to mitigate the impact on consumers’
credit scores and future credit access following disasters or catastrophic events. For example,
furnishers may use special codes to report delinquencies due to special circumstances.114 In
addition, lenders may offer forbearance plans, which are agreements that allow extended time for
consumers to become current on their payments.115 If lenders and consumers enter into loan
forbearance agreements, then furnishers have the option to report to the credit bureaus that these
consumers are current on their credit obligations.
Congress has also responded to mitigate the financial consequences of adverse events on
consumers. For example, Section 4021 of the Coronavirus Aid, Relief, and Economic Security
Act (CARES Act; P.L. 116-136) required furnishers during the COVID-19-pandemic-covered
period to report to the credit bureaus that consumers are current on their credit obligations if they
enter into agreements to defer, forbear, modify, make partial payments on, or get any other
assistance on their loan payments from financial institutions and fulfil those requirements,
provided they were current before this period.116 In other words, prior to the act, lenders could
choose whether to report loans in forbearance as paid on time. Under the act, lenders were
required to report such obligations as paid on time during the COVID-19 pandemic period.
Although the act protected the credit histories of consumers with forbearance agreements, some
consumers may still have experienced harm to their credit records, because lenders could choose
whether to enter into assistance agreements for many types of consumer loans.117
Author Information

Cheryl R. Cooper

Analyst in Financial Economics

Acknowledgments
This report was originally written by Darryl Getter, and the current author recognizes his significant
contributions to this report.

114 During natural disasters, lenders can flag affected borrowers by using special comment codes when reporting to
credit bureaus. See CFPB, Natural Disasters and Credit Reporting, November 2018, https://files.consumerfinance.gov/
f/documents/bcfp_quarterly-consumer-credit-trends_report_2018-11_natural-disaster-reporting.pdf.
115 Loan forbearance may be more difficult for some institutions if they require changes in credit contracts.
116 See CRS Report R46301, Title IV Provisions of the CARES Act (P.L. 116-136), coordinated by Andrew P. Scott.
117 For more information on consumer loan forbearance and debt relief during the COVID-19 pandemic, see CRS
Insight IN11550, COVID-19: Consumer Debt Relief During the Pandemic, by Cheryl R. Cooper.
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Disclaimer
This document was prepared by the Congressional Research Service (CRS). CRS serves as nonpartisan
shared staff to congressional committees and Members of Congress. It operates solely at the behest of and
under the direction of Congress. Information in a CRS Report should not be relied upon for purposes other
than public understanding of information that has been provided by CRS to Members of Congress in
connection with CRS’s institutional role. CRS Reports, as a work of the United States Government, are not
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