Will This New Bill Help Your Credit Score?


A new bill could dramatically change the U.S.’s credit reporting system as we know it.

The 202-page Comprehensive Consumer Credit Reporting Reform Act of 2016, introduced by Rep. Maxine Waters (D-Calif.) late last month, would, most notably:

  • Shorten the time most adverse credit information stays on reports to 4 years. Paid and settled debts would be removed even faster — 45 days after from the date of payment. (Currently, most negative information remains on credit reports for 7 years.)
  • Restrict the use of credit checks for employment purposes. (Federal law currently permits employers to view a version of a person’s credit report as part of their application process.)
  • Put the onus of proof in credit reporting disputes on the credit bureaus and data furnishers, instead of the consumer.
  • Give private student loan borrowers the ability to have adverse information removed from their credit reports after they make consistent loan repayments for a certain period of time, similarly to relief that already exists for federal student loan borrowers.
  • Expand access to free credit reports and credit scores.
  • Provide credit relief protections to the victims of predatory lending practices.
  • Provide the Consumer Financial Protection Bureau explicit authority to monitor the development of credit scoring models.

Waters’ office said the sweeping reform is intended to make the credit reporting system fairer, more accurate, and less confusing for consumers.

“This bill will bring much-needed accountability to the credit reporting industry, which will enhance consumer and creditor confidence in the integrity of information on reports and restore fairness in the system,” the congresswoman said in a press release.

The Consumer Data Industry Association, a trade group that represents credit reporting agencies, did not respond immediately to an email from Credit.com requesting comment on the bill. Someone who answered the phone at the organization said they no longer have a spokesperson and therefore cannot comment.

This isn’t the first time legislators have pushed for credit reporting reform. In fact, the bill builds on a draft proposal Waters revealed back in 2014. She also previously introduced a bill that would require consumer reporting agencies to remove any information related to fully paid or settled medical debt from a consumer’s credit report within 45 days. Sen. Elizabeth Warren (D-Mass.) and Rep. Steve Cohen (D-Tenn.) introduced legislation back in 2015 that meant to prohibit employers from requiring prospective employees to disclose their credit history as part of the job application process.

Despite these efforts, the nation’s credit reporting system has seen little in the way of legislative change since an amendment to the Fair Credit Reporting Act granting consumers access to free annual credit reports passed back in 2003. (In 2015, attorneys general in 31 states did get the major credit reporting agencies to agree to make changes in the way they address errors and how some negative information is added to credit reports as part of a $6 million settlement last year. And newer versions of many major credit scoring models, including new FICO scores, are now excluding paid medical debts from their calculations.)

Waters, who has the backing of many consumer advocacy groups, is working to drum up support for her latest proposal in the House and the Senate.

Dealing With Bad Credit

Consumers currently saddled with bad credit may be able to improve their scores by disputing errors on their credit reports (you can go here to learn how that process currently works), paying down high credit card balances and limiting inquiries for new credit while scores rebound. You should also check your credit to identify your specific credit score killers and then come up with a game plan to address those issues. You can monitor your progress by viewing your two free credit scores, updated each month, on Credit.com.

Remember, you can build good credit in the long-term by making all loan payments on time, keeping debt levels low and adding a mix of loan accounts over time.

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Your Old Boss Probably Wants You Back


Would you consider going back to a former employer? If you’re like most American workers responding to a recent survey, you wouldn’t. A full 52% of respondents to the Accountemps staffing firm’s survey said they likely would not. But the same can’t be said for former employers. Nearly all (98%) of human resources managers interviewed said they would welcome back a previous employee who left on good terms. (The survey did not provide stats regarding employees who left on bad terms.)

For employers, the benefits of rehiring a valued former employee can be pretty obvious.

“Boomerang employees have a shorter learning curve and may require less training, and have already proven themselves and their fit with the organization, so there are fewer surprises,” Bill Driscoll, a district president for Accountemps, said in a statement. “Companies who part ways unprofessionally or don’t take seriously the information they glean from exit interviews could miss out on bringing back someone great.”

Most employees, however, rarely leave jobs they’re happy with. The top reason employees gave for leaving a former employer was that they didn’t like the management (23%). Not liking the corporate culture was the second most common response (14%), tied with not liking their job duties. And 10% of employees said they wouldn’t consider returning because the company burned bridges when they left.

The surveys were conducted by independent research firms. They included responses from more than 300 HR managers at U.S. companies with 20 or more employees and more than 1,000 U.S. workers 18 years or older and employed in office environments.

“When it comes to rehiring former employees, consider why they left in the first place. If they resigned to pursue education, training or a role with more responsibility, having them back may bring new skills and ideas to the organization,” Driscoll said. “On the other hand, those who quit because of dissatisfaction with management, pay or the corporate culture may still be unhappy if they perceive nothing has changed while they were away.”

Remember, employers often conduct credit checks on potential employees, but these have no effect on your credit scores. They count as a soft inquiry on your report.

And if you are in the market for a new job, you can take the following actions to make sure there aren’t any surprises during an employer credit check:

  • Obtain a copy of your credit reports.
  • Dispute any errors on your reports with the credit reporting agency that issued the report containing the error.
  • Include disclosures in your credit reports explaining derogatory items.
  • Prepare to explain yourself to prospective employers by emphasizing that your mistakes were a thing of the past, and you have turned a new leaf and now exercise more sound financial habits.

And of course, it’s good to periodically check your credit reports throughout the year, whether or not you’re thinking of applying for a new job that might require a credit check. You can get a free credit report from each of the three credit reporting agencies once a year. And, although a prospective employer will never see your credit scores, those numbers are a good indicator of your credit health. You can view your two free credit scores, updated each month, on Credit.com.

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