reporting practices. topics included accuracy of credit reports and disparities in credit scores between whites and minorities. >> without objection, the chair is authorized to declare recess of the subcommittee at any time. without objection, members of the full committee not on this committee, are authorized to participate in today's hearing. as a reminder, i ask all members to keep themselves muted when they are not authorized. staff have been instructed not to mute members except where a member is not being recognized and there is inadvertent background noise. members are reminded that all house rules relating to order and decorum apply to this remote hearing. members are also reminded that they may participate in only one remote proceeding at a time. if you are participating today, please keep your camera on, and if you choose to attend a different remote proceeding, please turn your camera off. if members wish to be recognized during the hearing, please identify yourself by name to facilitate recognition. the title of today's hearing is consumer credit reporting: assessing accurately credit compliance. i now recognize myself for three minutes to give an opening statement. it is my honor to convey in this hearing titled consumer credit reporting, assessing accuracy. this will examine the role of the three national credit agencies -- i will call them ncra's -- in the consumer credit system that affect the lives of virtually every adult in the united states whether in assessing credit employment , housing, insurance, or even utilities, the information provided by the major ncra's has the power to either open or foreclose a vast array of opportunities that undergird economic security and social justice for consumers. yet, once again in 2020 consumers complained to the cfpb about ncra reporting more than any other subject, outpacing complains about credit repair, debt collectors, mortgage services, credit cards, bank accounts, surpassing complaints about predatory lenders, payday loan title loans, and usery -- usury. the number of ncra related complaints in 2020 was over 319 000 nearly double the number in 2019 so many in fact that for the first time the cfpb will be issuing a separate supplemental report to congress dedicated to this class of complaints alone. while this trend alone calls for oversight, the cares act imposed new protections for consumers with respect to credit reporting . hence this hearing will provide a timely window into the degree of compliance by the ncra's with cares act mandates and whether additional protections are needed. i look forward to hearing from today's witnesses about what -- what's causing the increased level of complaints, whether rising complaint levels are likely to continue, what has been done and what remains to be done to address the elevated levels of complaints, the potential benefits afforded by alternatives such as a federal credit bureau as proposed by president biden, whether comprehensive reforms are needed , and whether consumers need more control over their data. i'd like to thank the staff for the outstanding work that they've done to help facilitate this hearing. i'm grateful to the chair of the full committee, the honorable maxine waters, for all of the effort and energy that she puts into all of these hearings and moving us forward, and finally i want to thank the witnesses again for appearing today and my colleagues who are with us as well. i thank all of you and at this time i'm going to recognize the ranking member for his five-minute opening statement. mr. barr is recognized. representative are: anchor you, mr. chairman. -- thank you, mr. chairman. i appreciate you holding this hearing today and thank you to our witnesses for appearing before the committee. i look forward to your testimony . the allocation of credit is the lifeblood of the american economy. lenders, insurers and other , financial firms rely on accurate credit reports to reflect the potential risk of a customer and consumers expect that their credit reports are fair and appropriately reflect their financial histories to ensure they may access financial products at competitive prices. mechanisms exist for consumers to file a complaint or to dispute an inaccuracy in their credit report. the fair credit reporting act directs the cfpb to submit an annual report about complaints to congress. in the most recent report the cfpb stated that prior to 2019, the average number of complaints were approximately 300 000 per year but in 2020 there were approximately 542 300 complaints , a 54% increase from 2019. i look forward to learning more today from our witnesses about the potential causes for an increase in complaints and what the credit reporting agencies are doing to address them in -- address them. in march of last year congress acted to ensure that consumers credit consumer credit histories were not adversely impacted as a direct result of the covid-19 pandemic and ensuring -- and ensuing economic challenges as part of the cares act congress , amended the fair credit reporting act to ensure that consumers were protected during the pandemic clarifying that accommodations made by lenders or other creditors for customers were not included as negative entries on their credit reports. the credit bureaus themselves made additional accommodations to serve customers during the pandemic and i look forward to hearing more about their activities during today's hearing. despite many advancements and innovations in financial services a staggering number of americans remain unable to access credit. a recent study by the federal reserve bank of new york found that at the end of 2018 approximately 26.5 million adult americans or roughly 10.5 percent of the population were not in the formal credit economy and thus did not have a credit history. this so-called credit invisibility disproportionately impacts consumers in rural areas and can perpetuate the cycle of reduced access to traditional financial services. while many people -- while many consumers may not have traditional credit histories , they should be able to leverage alternative examples of their financial health with -- where on-time payment of cell phone bills, rent, utility bills, and other payments and other alternative data are indicative of a consumer's ability to repay. i hope to learn more about how the credit bureaus are innovating to account for this alternative data and the outlook for expanding credit availability to underserved or credit and it -- credit invisible individuals. unfortunately, some on the other side including the president are using imperfections in the current credit reporting landscape to push for radical solutions that would increase prices for consumers limit competition and make credit less , available, especially for low and moderate income borrowers . the biden administration has proposed eliminating the private sector credit bureaus and replacing them with a centralized nationalized credit reporting bureau run by the cfpb . while the current credit reporting system is not perfect , nationalizing the process and thus eliminating all incentives for sound customer service and innovation will leave consumers further behind. appropriate government oversight of the credit reporting agencies and private sector innovation are the most effective means to reduce credit data errors and bring about a more inclusive credit system. but risk-based pricing and credit allocation, insurance and other financial products is essential to ensuring that consumers are paying the appropriate price for their products. firms are adequately managing risk and allocation of credit is not arbitrarily limited based on onerous, one-size-fits-all restrictions. firms are prohibited from pricing risk based on race nationality religion or other democratic demographic characteristics, instead focusing on the metrics that demonstrably reflect and accurately reflect a consumer's ability to repay. a recent study from the u.s. chamber of commerce illustrates that eliminating risk-based pricing and replacing it with a uniform pricing model would raise prices on consumers and limit availability of credit and other financial services to low and middle-income borrowers a -- borrowers. a prohibition on using predictive data would not make the system more equitable, but instead dramatically exacerbate the inequalities we all hope to eliminate. i look forward to discussing these important topics today and mr. chairman, on a personal note this will be my last hearing as ranking member of the oversight subcommittee as i move on next month to serve as the ranking member of the national security and monetary policy subcommittee . it has been a pleasure serving on this subcommittee with you . thank you and i yield back. >> the gentleman yields back and the chair would like to if i may briefly say state that i've enjoyed working with you as well and i'm sure we'll find additional opportunities to work together. congratulations on your new station in life. now the chair would recognize the chairwoman, the gentlewoman from california, the honorable maxine waters for one minute you -- one minute. we seem to be having some technical difficulties. while we examine our technology to ascertain whether we're having such difficulties, please allow me now to recognize the vice chair a person who has been a friend for some number of years, the gentlewoman from georgia are one minute. >> thank you. and i am honored to be serving in my first hearing today as vice chair of the oversight and investigation subcommittee on this subcommittee we consistently uplift those most marginalized something that i strive for and all that i do in congress, we uncover the information needed to inform better policy and oversee that government agencies and programs are indeed working for the people. i'm grateful for the opportunity to help lead the important work of the financial services committee's investigative arm, and today we'll take a deep dive into credit reporting. an individual's credit score can determine whether they can do things like buy a house or start a small business, or more broadly build a better life for themselves and their families, to help hardworking folks get ahead in the wake of this pandemic, ensuring credit reporting is fair accurate and consumer friendly will be of utmost importance. i look forward to hearing from our witnesses today and working together with my colleagues on this important issue and mr. chairman thank you and i yield back. >> the gentlelady yields back and the chair neglected to congratulate the gentlelady for her new station in life. i commend you and do look forward to working with you as well. the chair will now introduce the witnesses and i welcome our witnesses and i'm pleased to have the opportunity to introduce them. we have with us miss chichi wu, who is a staff attorney at the national consumer law center we -- law center. we have miss beverly anderson, who is president for global consumer solutions at equifax. we have ms sandy anderson, senior vice president for strategy and operations at experian credit services, we have mr. john donahue who is executive vice president for consumer interactive at transunion, and also we have miss rebecca keane, who is a partner at hudson cook law firm . the witnesses are reminded that your oral testimony will be limited to five minutes. you should be able to see a timer on your screen that will indicate how much time you have left. a chime will go off at the end of your time. i would ask you to be mindful of the timer and quickly wrap up your testimony if you hear the chime so that we can be respectful of both the witnesses and the committee members' time . without objection, your written statements will be made a part of the record. once the witnesses finish their testimony, each member will have five minutes to ask questions . before i go to miss wu, i have been given an indication that miss waters is now available . i will recognize the chair of the full committee for one minute and then we will move to ms. woo. >> thank you very much, mr. green, for holding this important hearing on credit reporting. in february 2019 one of the first hearings i convened as chairwoman was a hearing with the three ceos of equifax experience and trans union the national credit union the national credit bureaus to examine the ways in which the current system fails to protect consumers. we advanced several bills to the house to fix the broken credit reporting system but the senate failed to act, unfortunately. consumer credit reporting complaints to the cfpb more than doubled from 2019 to 2020, suggesting a surge in more credit reporting errors during the pandemic. we must learn what is behind these trends, and what the credit bureaus must do to protect our consumers, and i thank you very much and i yield back the balance of my time miss -- my time. >> miss wu for five minutes to give an oral presentation of your testimony. ms. wu, you're now recognized uh you may be on mute. >> thank you, mr. chairman, ranking members of the subcommittee and chairman waters thank you for inviting me to , testify. today i'm testifying on behalf of the low-income clients of the national consumer law center i've been testifying on credit reporting abuses since 2007. before me at nclc was tony rodriguez. he went on to the cfpb and ftc and we just celebrated his retirement yesterday. before him was our former director will ogburn, in fact the first director of nclc testified in fcra hearings in 1969. i mentioned this because it shows that we've been battling the abuses of credit bureaus for a very long time and yet it hasn't gotten better, in fact it might have gotten worse. 300,000 complaints to the cfpb in 2020, that's a lot of complaints. twice as much as last year nearly two-thirds of the complaints to the cfpb and of course according to the ftc's 2012 study, there are 10 million americans who have errors so serious on their credit reports it could deny them or cost them more for credit. and no, this explosion in complaints isn't just credit repair outfits challenging accurate information, the cfpb has said there's no evidence of that. the credit bureaus have been blaming credit repair for decades, it's the same old same old. what is different is a pandemic with devastating economic impact on many americans potentially causing more folks to check the credit report which the , credit bureaus commendably did make available once per week for free. the cares act with its complicated provisions that some creditors seem to be tripping up on and a looming rental housing crisis with eight to ten million americans possibly facing eviction. the last issue is another possible reason that complaints have exploded, the fact that nowadays, 90% of landlords conduct credit checks as part of tenant screening. pushed by the credit bureau's expansion into new uses and thirst for more customers and more sales. an article from this past sunday's new york times documents how millions of americans are being shut out of stable rental housing by credit checks. this article notes how a survey of residents in extended hotels in norcross, georgia, 70% of whom were black, named credit as the biggest barrier for more permanent housing and 600 students stay at extended state hotels in the largest school system in georgia. 600 children without a permanent roof over their heads in part because of the credit bureaus. using credit scores and housing versus the already terrible economic and racial inequality in our country and of course being denied housing provides a great incentive to check your credit report and dispute errors . the credit repairs only have themselves to blame. the more they hawk their products for inappropriate uses and more of the 10 million americans with serious errors are going to find those errors and complain. speaking of credit repair, the credit bureaus complain so much about it but according to recent legal case lex, they have agreements with lexington law the second biggest credit repair firm. if they complain about it so much, why do they have agreements in it? the cfpb sued lexington law for deceptive advertising. if you don't believe me that the explosion of complaints is not illegitimate credit repair check out the narratives and the cfpb complaint database and read for yourself. we've highlighted a few in our written testimony. here is an example. "in addition to td bank posting the account as paid in full they reported me as deceased i wouldn't have known this except i was trying to get a mortgage and my bank told me that experian at equifax showed me deceased based on td bank's report. i called x and x but also could not prove to them to their satisfaction, despite answering all their questions as to my identity that i am in fact alive . i was unable to get the mortgage due to these errors in on my credit report and the inability or unwillingness of these companies to correct their errors." one reason why credit bureaus might actually not mind credit repair or this huge volume of disputes is that they actually don't do a heck of a lot when they get a dispute. they've automated the heck out of the system to the point where when a consumer disputes online, it automatically flows to the information furniture with no need for work by the credit bureaus. even for paper disputes, the main job of offshore vendors to handle these disputes is to pick a two or three digit code to categorize this dispute, maybe add a line of text upload documents and send it to the furnisher. for the so for non-existent or very little work on most disputes the automated system using used for processing disputes called e oscar charges $.30 per dispute. as you can imagine, more disputes, more fees. always follow the money. it's time for a public credit registry that will treat americans fairly, fix disputes and not try to expand credit reporting to every conceivable aspect of american life, however inappropriate. i thank you for the opportunity to testify and look forward to your questions. >> thank you. the chair now recognizes ms. beverly anderson for five minutes to give your oral presentation of your testimony . >> chairman greene, ranking member barr, and members of the subcommittee, and chairwoman waters, thank you for the opportunity to testify today. i am beverly anderson president of global consumer solutions and i am responsible for providing free and paid credit and identity products services and education to consumers. i want to recognize that credit reporting accuracy is a common priority that equifax shares with consumers lawmakers regulators and financial institutions. under the fair credit reporting act consumer reporting agencies and data furnishers must meet stringent requirements for accuracy, fairness, and privacy. i have a personal passion to support financial inclusion and a professional responsibility to assist consumers as they consider the most significant financial decisions. i understand how frustrating it can be for a consumer to be on the cusp of an exciting financial event only to discover an issue with their credit report. when i hear these stories, it strengthens my resolve to do better. the increase in complaints against equifax through the cfpb consumer complaint database is concerning. i interpret the increase not as an indictment that the credit bureau system is broken, but rather as evidence that the national credit bureaus play an important role in facilitating the dispute process between consumers and their creditors . let me briefly review three factors to contextualize the increase in complaint volume . first, consumers submitted more complaints against the national credit bureaus through the cfpb portal as the cares act protections appeared on their credit reports. the covid pandemic presented an extraordinary set of challenges for american consumers. congress moved quickly in early 2020 to pass the cares act that included new consumer protections such as mortgage forbearance, eviction moratorium, and a pause on student loan payments. as a result, lenders took swift action to comply with the new cares act provisions and data reporting requirements. with the combination of consumer economic uncertainty and the implementation of new accommodations, consumers review their credit reports more often . second, consumers routinely submit complaints to the cfpb that are not complaints about credit bureau actions but rather disputes about data reported to us. consumer reporting agencies serve as an intermediary between consumers and their lender. our data show that 95 percent of portal complaints involve disputes that typically relate to information provided by a lender, an outdated address, or a credit score, therefore, most complaints against the national credit bureaus in the cfpb portal should not be attributed to errors made by the credit bureaus. and third, the portal has been inundated by submissions from credit repair organizations disputing adverse but accurate information on consumer report . recent internal equifax reviews indicate that 65% of complaints in the portal appeared to be associated with credit repair organizations. let me close my opening remarks by reviewing equifax's efforts to assist consumers through the pandemic. in april 2020 and at my direction, we quickly launched a covid and credit financial resource center to help consumers understand and evaluate the impact of the pandemic on their finances i -- finances. i personally conducted public webinars and recorded podcasts to assist consumers. as the pandemic took hold, three national credit bureaus collectively decided to provide consumers with free credit reports each week, and in march of this year we extended that initiative through april of 2022 . equifax continues to invest millions of dollars to deliver exceptional care to consumers in our quest to become the most consumer friendly cra. we modernized our telephony and back office infrastructure, we've automated core processes , expanded call center hours, and upscaled our agents. my goal is for equifax to be accessible responsive caring and efficient at every touch point in a consumers engagement. i am proud of the work that equifax has done to assist consumer through the pandemic, and i pledge to do more. i look forward to answering your questions. thank you. >> thank you, ms. innovation. you are now recognized for five -- ms. anderson. sandy anderson, you are now recognized for five minutes to give an oral presentation of your testimony. >> thank you. i am sandy anderson, senior vice president of operations for experience north america. let me begin by stating why credit bureaus exist and how consumers benefit credit bureaus accurately compile individuals payment histories reported to us by creditors so that lenders can use this data to make sound underwriting decisions sound lending decisions for credit cards. autos and mortgages mean fewer defaults, fewer defaults mean lower cost of credit for consumers and greater availability of consumer credit across the economy credit bureau data is blind to factors such as race, ethnicity, and gender so it helps lenders ensure compliance with the equal credit opportunity to act. what we hear most often from consumers and policy makers is that they want us to focus on three clear objectives ensure the information we hold on consumers is secure make credit reports accurate and manage a data dispute system that is easy for consumers to access and use understands these responsibilities and has significantly shifted its focus to the consumer experian has kept pace serving consumers during the covid-19 pandemic and will continue as our nation's economy recovers. we are working on our own initiatives and with our regulators under continuous supervision on this priority experian supports this committee's goal of enhancing the accuracy of credit reports and improving the dispute resolution process. we believe the best way to achieve and maintain improvements on behalf of consumers is through a robust and continuous supervision and examination program which has been administered by the consumer financial protection bureau in place since 2013. we have implemented many new initiatives as a result. experian has invested heavily in systems and processes to improve data accuracy as we continually strive to reach 100% accuracy . stringent requirements are in place to identify and eliminate accurate inaccurate data submitted monthly by approximately 10,000 data furnishers before it is included in a consumers file. experian provides data furnishers with monthly reports describing any of their data we have rejected and why and providing them with historical information about their data contributions and consumer disk you -- dispute performance. through this transparent feedback loop, experian is making continuous progress in eliminating errors even before data is admitted -- submitted to us. an important component of accuracy is to make credit reports accessible for consumers so that they can easily review and dispute errors in their file . experience online dispute portal including a mobile optimized and highly rated app makes it easy for consumers to submit disputes and to receive the results of those disputes. experian also supports the committee's goal of creating more opportunities for financial inclusion and financial literacy for consumers thought of as credit invisible. many consumers may not have a mortgage or credit cards, but they do make telephone, utility, and other recurring monthly payments. experian is now accommodating this data through a groundbreaking product known as the boost. we are delivering this data directly to lenders so that they can expand their efforts to reach underserved consumers . experian boost is a game changer . it allows consumers to safely and easily opt-in to having monthly payment information on accounts that are not reported to the cras included directly into their credit file. experian boost is particularly helpful to consumers who are new to credit or have had financial challenges . so far more than six million consumers have chosen to use experian boost to improve their credit score. to help improve financial literacy, experian is also providing access to free credit monitoring three credit reports three credit scores and financial education to more than 40 million u.s. consumers . experian is also partnering with lenders through the occ's project reach initiative to identify new sources of predictive data that can be used to improve access to credit for underserved and marginalized consumers. thank you for inviting me to testify and i look forward to answering your questions. >> thank you, ms. anderson. mr. danaher, you're now recognized for five minutes to give your overall presentation of your testimony. >> chairman greene, ranking member barr, chairwoman waters, and members of the committee thank you for the opportunity to participate in this afternoon's discussion of these critical policy issues. my name is john danaher and i serve as president of transunion's consumer interactive business transunion is a global information and insights company headquartered in chicago with more than four thousand employees in the united states and 8200 worldwide. we seek to help people around the world through the power of information identify and access opportunities that bring a higher quality of life. our consumer interactive segment helps consumers manage their personal finances and take precautions against identity theft. we provide consumers with credit scores, credit reports, credit monitoring, fraud prevention and support, and financial management tools. we also provide credit monitoring solutions that help businesses respond to data breach events. our direct-to-consumer products help americans achieve financial freedom and elevate their lives. the past 14 months were unlike any in our history and we believe all of us must work together to protect and support consumers. transunion recognizes our central role in ensuring the fairness and stability of our nation's consumer credit markets and we are eager to partner with this committee to help all consumers, especially the most disadvantaged americans and those affected by the pandemic . the pandemic required novel and significant consumer support efforts both from the private sector and the federal government. at transunion, we immediately pivoted our workforce to remote servicing while still providing consumers the necessary support they needed to navigate the pandemic. our data indicates that both lending and the broader economy are normalizing, but serious challenges continue to persist for many consumers. helping consumers affected by the pandemic secure the financial protection they need has been and continues to be one of our top priorities. we are regularly communicating with lenders, property management firms, scoring companies, and data furnishers on how they can provide relief to customers through established hardship programs. it is incumbent on our industry to support the policy objectives of the bipartisan cares act and we are pleased the accommodations provisions at the core of that law are working we -- working. we estimate more than 200 million consumer accounts have been placed in protective accommodations because of the cares act. at the onset of the pandemic, transunion led the effort to expand the availability of free credit reports to all consumers on a weekly basis. we are proud to report that more than 166 million consumers have used our services to access their credit data. it is undeniable that the pandemic is exacerbating pre-existing structural inequalities, with underrepresented americans facing unique challenges. we are striving to address matters of racial equity and want to be at the vanguard of defining consumer-focused principles for the next generation of data use. to that end, last year we launched transunion's task force on racial equity, which i lead . as part of this work, we are ensuring that all uses of trans union unions products and solutions are consistent with our values and the goal of financial inclusion in the economies we serve. we are also redoubling our efforts supporting the proliferation of alternative data, which is the most direct way to expand credit to historically disadvantaged groups. notably, we are working with the occ on its project reach efforts . transunion believes alternative data is a racial justice issue . millions of underrepresented consumers make rental utility and other payments every month yet the current system gives , them no credit, often rendering them credit invisible. transunion is committed to helping americans protect their financial health during and after the pandemic. we look forward to working with congress to foster financial inclusion, and further empower consumers. i appreciate the opportunity to be with you today and look forward to answering your questions. >> thank you. miss keene, you are now recognized for five minutes to give an overall presentation of your testimony. >> chairman greene, ranking member barr, chairwoman waters, and members of the subcommittee, thank you for the opportunity to appear before you today to talk about the consumer reporting industry's commitment to the accuracy of credit reports. my name is rebecca keane, and i am a partner at hudson cook where i chair the credit reporting privacy and data security practice group. i'm appearing today on behalf of the consumer data industry association or cdia cdia represents the nationwide credit bureaus regional and specialized credit bureaus background check and residential screening companies and others. the credit reporting agencies here today and the cdi members help the american consumer and the larger economy by maintaining a robust consumer reporting system that facilitates credit employment and housing transactions nationwide. cdia members are helping to solve the problem of the unbanked and credit invisible populations through innovation by expanding the kinds of data collected such as rental history or payments on telephone or other utility bills. this expansion gives lenders and others information that allows more consumers to access traditional financial services and to integrate more consumers into the mainstream financial system. the principal law that governs the consumer reporting system is the fair credit reporting act . the fcra requires consumer reporting agencies to follow reasonable procedures to assure maximum possible accuracy of the information in consumer reports . the maximum possible accuracy standard is not one of perfection, but it balances the protection of consumers and the needs of commerce. the fcre recognizes that accuracy begins with the data coming into the system. the lenders who provide that data, the furnishers, must have reasonable policies and procedures to ensure the accuracy and integrity of the information they provide to consumer reporting agencies. the -- agencies. the fcra also gives consumers the right to dispute accuracy of information directly with those furnishers. to assure accuracy the consumer reporting agencies then screen lenders before they even onboard them as furnishers and furnished data undergoes a number of checks and quality control measures before it is added to a credit file. nationwide consumer reporting agencies obtain information electronically using a standardized reporting format to facilitate the accurate and consistent reporting of data throughout the system. the fcra also provides consumers with the right to access information about them and to dispute any inaccuracies. this dispute process is an important and necessary component of ensuring accuracy. . for this reason, the nationwide consumer reporting agencies have made significant investments in consumer dispute resolution to make it easier for consumers to identify and correct potential errors in their files. these improvements, which are outlined in my written testimony, include an escalation process for addressing disputes related to mixed consumer files and identity theft. it also is important to recognize that there is a market incentive to ensure maximum possible accuracy. the customers of the credit bureaus financial institutions and their regulators rely on and demand accurate data to make critical decisions about credit. that demand drives accuracy. in my written testimony i addressed the number of credit reporting complaints to the cfpb and why those are not a good measure of accuracy particularly giving the impact of bad actors credit repair operators on the numbers of complaints. i'll be happy to address any question the subcommittee has but with my remaining time i want to turn to the protections that congress enacted in response to the covid-19 pandemic the cares act passed in march 2020 implemented a number of significant protections for consumers, including special credit reporting changes and payment deferrals. these changes allowed consumers to preserve their credit history while they work through the challenges of the pandemic and the data shows that the impact of these protections has been significant, the number of mis-payments have gone down and the national average score fico score went up during 2020. the three nationwide consumer reporting agencies have resources on their website to inform consumers of their options and protections under the cares act, along with other resources that are available to help them manage their credit during the pandemic. in addition, the nationwide consumer reporting agencies have voluntarily increased the number of free reports available to consumer from once per year to once per week through april of 2022. as we emerge from the pandemic, cdia and its members are committed to providing consumers with the tools they need to manage their financial future. i thank you for the opportunity to testify before you today and i'll be happy to answer any questions. >> thank you. the chair will now recognize members for five minutes questions. i now recognize the gentlewoman from california and the chair of the full committee for five minutes. >> thank you very much, congressman greene. i'm going to address this question to beverly anderson, following enactment of the cares act you said and i quote it will take a moment to figure out how to execute against what's been stipulated by the carers act so something's bound to slip through the cracks. ". earlier this year, the subcommittee on consumer protection and financial institutions held a hearing called slipping through the cracks, which provided a number of legislative solutions to help america's consumers. in the pandemic we cannot accept that consumers will simply slip through the cracks, so let me give you one example we heard at the subcommittee hearing carlos -- hearing. carlos sanchez adams, managing attorney for texas rio grande legal aid, said and i quote many of our clients who have been treated for the virus have expressed concern over medical debt collection and insurance coverage. ms m had a medical debt account appear on her credit report for treatment her grandson received . she was also contacted by debt collectors regarding the same medical debt. her grandson was covered by medicaid and under texas law neither of them were responsible for cost of any medical services provided to them. however the debt collectors continued to collect on the debt and report quote -- and report the debt. so this grandmother's credit was harmed through no fault of her own. while her grandson was getting medical treatment, he was covered for it should not be complicated and consumers should not have to get a lawyer every time someone makes a mistake that shows up on their credit report making it expensive for them to get a loan, among other harms. yes or no, is her case something that is bound to slip through the cracks? >> thank you for your question. i appreciate the fact that you listened to one of my podcasts or a webinar and what i was simply stating and remember this was early days of the pandemic consumers were literally asking , us questions about the various stipulations and protections in the cares act. they wanted to know how the cares act would protect them, what things might change, what things would be different on their credit report, and we were simply articulating things might be confusing. >> what have you done to ensure that people are not simply falling through the cracks what -- cracks? what have you done to rectify that, to lessen the number of mistakes you make? because this is what is harming our consumers. the mistakes. and we cannot correct them once you do it. and we don't get a lot of help from the bureaus. so what have you done? >> since 2012 we have been actively involved in addressing issues of accuracy in terms of the way in which we work with furnishers, we have an entire team who spends time vetting furnishers vetting the data that , they provide us and creating remediation plans, quality controls, and monitoring and if the furnisher fails to meet our standards our standards of data quality we prevent them from reporting. >> how effective have you been? how much reduction have you had in these kinds of falling through the cracks? >> we know we have made considerable progress. >> how do you know? >> we monitor all of the data that we receive and we make sure that we're checking accuracy at every turn. >> give me some numbers. what is different now than before? >> we know that we have created an opportunity for consumers how -- consumers -- >> how do you know? i have to take back my time. but i want to know how you are able to define that you have been effective. >> we look at metrics in a number of ways and would be happy to bring some of those metrics back and share them with you. >> thank you. mr. chairman, i am going to ask that miss anderson sent us back some information and reports that show that they have reduced or eliminated the number of mistakes that cause people to fall through the cracks. i yelled back the balance of my time. >> the gentlelady yields back and without objection, the question will be submitted to ms. anderson for her reply. the chair recognizes ranking member barr. >> thank you. first question is about risk-based pricing, lenders insurers and other financial market participants rely on risk-based pricing for their products and services they use data indicative of a consumer's ability to repay blind of race nationality of religion or other immutable characteristics to give consumers the best price ms -- best price. would you discuss the importance of risk-based pricing and financial services and specifically what impact would a government-imposed prohibition on risk-based pricing or a mandate for using a mandate for use of uniform pricing have on the price availability and access to financial services? >> thank you, representative, for your question. the studies that have come out focused on risk-based pricing have shown that if we abandon risk-based pricing that will result in an overall increase in the price of credit and a lessening of the availability of credit for consumers. risk-based pricing has enabled more consumers to qualify for credit, even if traditionally they would have been declined. if we reverse this course, there will be fewer consumers who qualify for credit. >> thank you for that. i do worry about proposals that would politicize the out of the assignment of credit scores based not on accurate data but on other factors that could be politically motivated that would increase the cost of credit for everyone. let me talk about president biden's proposal for a federal credit bureau. as you all know and as has been pointed out today, president biden proposed eliminating private credit reporting agencies and replacing them with a public government credit bureau within the cfpb. i believe this is an unnecessary federal takeover of a private industry at the expense of taxpayers. ms. keene, what are some of the issues that you foresee with one government-run a single government-run credit bureau and please amplify your testimony about the market incentive that exists currently to maintain and improve the accuracy and completeness of credit reports >>. thank you, representative. from my background at the ftc i am very pro competition and the current market now has three large credit reporting bureaus who compete with each other for accuracy and on others products and services and innovations. we believe that a government-run credit bureau would not have those same incentives to find new solutions for consumers or expand access. the proposal today for the government-run credit bureau would leverage the same data that's here already in the system. our members are looking for new and different sources of data and that type of innovation fuels additional entrance into the credit market. in addition, we take issue with this concept that the government-run credit bureau would be more answerable to consumers. under the current system consumers have not only the right to dispute but they also have significant private causes of action that enable them if all else fails to bring private lawsuits against the credit bureaus and obtain money at court. it is unclear whether the government credit bureau would be similarly ansible to consumers when problems occur and they when you deal with large sets of data -- >> that's a good point about being responsive to consumers but i'm also worried about the politicization that could happen with a single government bureau we've seen that with the cfpb itself. the accuracy of information based on just data and not other extraneous factors i think is really important. alternative data, i'll ask ms keane but any of the representatives of the cras can can chime in because of the the innovations that are happening in terms of alternative data i think experian boost is an example of this, mr. danaher, you had an interesting piece of testimony about what is the let's say, i highlighted the credit vision suite i thought that was very interesting and innovative uh how would utilization of this data by credit reporting agencies help americans gain access to credit . >> what we have seen so far is that it reaches more consumers for those who don't have a traditional credit history these alternative data sources act as good history they can build on to further their credit goals . and so for folks like new entrants to the credit market be it uh younger americans or immigrants we're able to leverage this information that they already have and turn it into credit information. thank you. >> my time is expired but i love this private sector innovation on on financial and credit inclusion that i doubt a government agency would ever be able to do. i yield back. >> the gentleman's time has expired the chair now recognizes miss talib the gentlelady from michigan for five minutes of questions. >> thank you. so many of our families are directly impacted by the way credit reporting is conducted now. i do have some questions for everyone on the panel and i think this is so important the initial intent of credit reporting was for lending and now it's impacting access to transportation it's also the leading cause for many of our veterans you know who really come back from serving our country with no access to credit because they weren't here to spend or to apply for credit cards or whatever the processes that these private engine agencies decide related to credit score. so my question is to many of those of the panel, what does a credit score have to do with someone's driving record, whether or not they are a good driver? does anyone know the answer to the question? >> is an excellent question. i would say absolutely nothing. a credit score should be used for one thing only, and that's credit. it doesn't have anything to do with your driving, your ability to do a job as a worker, with your honesty, it has nothing to do with your character. it predicts whether there's going to be a 60-day late in the next two years and it shouldn't be used for housing. it is shutting out so many low-income americans from permanent housing as the new york times documented in a very heartbreaking manner. >> university of michigan did a wonderful study showing that it actually kept people in the cycle of poverty. the fact that credit scores are now being used. -- being used for auto insurance which, right now in my district we have the highest in the , nation, over $5,000 average per household. so many of my front-line workers, teachers who have second jobs just to pay for auto insurance because the credit score is a heavyweight on the calculation. >> the ftc actually did a study on credit-based insurance scores following the fact act in 2003 and in its look at this that the use of credit in insurance determinations found that there was a correlation between the way someone pays their bills and whether or not they're going to cost more -- >> so if they are low income and have a hard time paying their bill, let's raise the rates on auto insurance? it has nothing to do with if they are a good driver, it's more punishment because they are poor and they cannot afford to pay auto insurance. that is what i am hearing. but i'm wondering whether or not you will would support a study of disparate impact of using credit scores as a factor for auto insurance rate. would anyone be opposed to that? would you want to know if the structural racism exists in the use of credit scoring for auto insurance? would you want to know that as a business in the united states? >> representative, the ftc study that focused on credit-based insurance scores looked at that as part of its assessment and similar to the federal reserve study found that the factors that go into credit scores are neutral. >> even though it has resulted in more black folks getting higher rates of auto insurance than than their white counterparts neighbors? you see what i'm saying here the -- saying here. you can say it is neutral, but the application itself and the chairman knows i've been pushing for this study because it's critically important to understanding when we say disparate impact. what we mean is it's not direct intentional discrimination but in essence by using the credit score for that it in essence is keeping people in poverty and that tends to impact communities of color specifically and it just it's just ridiculous that someone who was a doctor but has a dui for driving under the influence is paying less insurance than someone with bad credit but no dui. people who cannot afford to pay some of the high cost of living in the united states, they can't even pay their water bills, you're telling me let's punish them because they can't afford high rates of auto insurance, let's go ahead and sell credit reports to auto insurance industries. it has nothing to do about if they are a safe driver or whether or not the car is a save par or the length of time it takes them to get home from their job. it's absurd that all you stand with that when we all know it's because you get new customers you get customers meaning they buy your credit reports from you and you make money off of keeping people in poverty. do you see what i'm saying? shame on you, shame on all of you. the number one reason we see personal bankruptcy in the country is medical debt. so i hope this credit reporting agencies support our bill that we pass out our financial services committee that bars medically necessary debt, procedures that are needed and required. hr 2537, requiring them not to put medically necessary debt on your credit report because they needed it to live. it is not their fault that they got sick. and because they're poor they shouldn't be pushed back and not allowed to get procedures done. just because you're poor, you shouldn't be able to dine this country. do you understand why this is so important? mr. chairman, i yield. >> mr. chairman, point of order, can we -- >> excuse me, let me recognize first. >> i just wanted to make sure we are checking the accuracy on the clock. i feel like we have had some inadvertent pauses on time on the countdown clock. could you just check that? i will keep an eye on it, thank you very much for calling it to my attention. with that, the chair recognizes the gentleman from georgia for five minutes of questions. >> thank you. one of the complaints that we sometimes hear about the credit bureau is there's not enough competition and i know many of my colleagues support competition in this industry and have supported legislation and conducted oversight of the fha fa to bring more competition to the credit reporting and scoring but the biden administration has . but the biden administration has proposed eliminating competition by creating another government entity, a government credit bureau. ms. anderson of experience -- experian, what would the consequences be if congress replaced the current with a government run credit bureau? thank you. >> we believe at experian that that the system is working it it does drive competition it does drive innovation and allows us to to bring to market uh solutions like experian boost to bring in data that is not part of the existing credit reports and allow consumers to expand that information in their credit report and allow lenders to use that in order to serve underserved and and financially challenged consumers. so we believe that this system works with the appropriate level of oversight by the cfpb and that competition drives innovation. >> i appreciate that. using the tools that we need, it's all about mitigating risk . lenders want to lend money, that's how they make their profit. auto dealers want to sell cars. that is how they make their living. and but the only way that they can do this and and do it affordably in other words making loans at an interest rate because misery -- interest rate commensurate with the risk is if they know what the risk is and in some cases people will be denied credit or they will be charged more credit simply based on the risk and so my fear is that a government bureau is not going to be looking just at the the data but at an expected outcome and that's when we get in trouble. a recent study from the u.s. chamber of commerce indicates that risk-based pricing in lending is good for consumers and that credit scores predict risk without bias. the other miss anderson of equifax can you discuss why it's so important to have robust credit scores in the in the credit based economy and why is it counterproductive to suppress negative information on your credit reports. >> thank you. i absolutely believe that it's necessary and important to have credit scores in the economy. it's important for us to understand by using access to data and providing that data to lenders so that they can in fact make a fully informed decision on extending credit to consumers and extending credit to consumers at the reasonable rates based upon risk. i also think it benefits consumers consumers have the opportunity to get access to credit and to also get access to credit at affordable rates. the access of credit scores in the system allows for consumers to get credit, particularly quick consistent access to credit that you don't see in many countries, today a consumer can walk off of an auto lot and buy a car because of the ability for a lender to have full information and make a yes credit decision, so it's important for us to have a fully functioning credit system with full information. >> so you would say that a good credit rating system that mitigates risk is good for the consumers because it helps effectively lower the rates for consumers to increase their buying power. if we didn't have this way of determining who is of greater risk, would you say that the result would be is most if not all consumers would then pay a higher rate because then they have to make up for the bad debt that would be out there that would be issued by those who didn't pay? does that make sense? >> yes. i agree. >> okay mr. danaher, as you know the alternative data provides major benefits to consumers who previously had little or no credit history should congress pass legislation to expand the types of data included in credit reports. >> yes, we fully support the reporting of alternative data as we are characterizing it, rental payments, utility payments, because we believe that greatly expands access to credit our analysis shows that maybe up to 60 million americans who are currently invisible or slightly invisible to the system would become visible and lenders will figure out how to lend to those once they are visible to the system. so we fully support any efforts to the provision of alternative data to expand access to consumers. >> followed up with that, there are improvements that could be made to the system such as updating credit files properly instead of summer having to wait 30 days for changes reflected on the credit report. that is a needed reform. can you elaborate on that? >> the fcra and those standards were set years before the great advances in technology and we have the ability now to take data and pastor and that benefits consumers. >> thank you. i yield. >> your time has expired. in reference to the ranking member,, i do agree we are having a problem with our timer. in fact, this time we extended more than six minutes to the member. but i will try as best i can to keep an eye on it on the staff is working on the problem. with that said, we have miss adams, the gentle from north carolina, who will be recognized for five minutes for her questions. >> thank you for convening the hearing and thank you to our witnesses. the role that our credit bureaus play as consumer credit report databases is critical both to lenders, but especially to borrowers. a borrower's credit report could mean the difference in getting affordable capital or being forced into a more expensive product or not receiving credit at all. it's been more than 15 years since congress has enacted accepted that there are shortcomings that need to be addressed and i plan to introduce my bill the reporting for all consumers act that will place better requirements on providing consumers greater transparency and ensuring the accuracy and completeness of items. we will go through all of this again to make sure consumers are fully knowledgeable on the options available to them to ensure that their financial health and well-being is secure. i believe that you all would agree that maintaining accuracy and completeness, transparency and accuracy at the bureau is important. there has been no broad-based public analysis of the accuracy of any error rate of consumer reports and this will help us better understand what this looks like. with regard to the following categories, inquiries, consumer identifying information and public records. did you have any other questions? >> to whom are you addressing your question? >> to ms. anderson. >> we will start with ms. anderson. >> there are two of us. which ms. anderson? >> both ms. anderson's and the senator. >> i would agree, accuracy is very important. there is a ton of work that has been done across the years, clarifying the reports, bringing greater accuracy but i believe there is more work we can do if we all work to ensure maximum accuracy. the data you're asking for i would be happy to follow-up with. but i just wanted to acknowledge that. i completely agree, if you all would send that to us in writing. do we have any other responses you could send it to us in writing. >> thank you, congresswoman i mean we track those in two ways. one is we look at all the disputes that we get from consumers. and determine what the cause of the air was and as they -- as ms. anderson pointed out we can get you that by category so we can follow up and report that data to you. the other way we track it is looking at what data furniture's divide us. we work with them to try and correct it, and if it can't get corrected, as ms. anderson pointed out, we will prevent that data furniture from reporting data to us. so we have statistics on both sides of that. >> do you feel a broad-based public analysis from the error rate on consumer reports would be warranted? >> before you answer, please allow me to intercede. then the chair will have to move on to the next witness. >> i agree that more data is always useful. it took the fcc 10 years to do that study, it is incredibly intensive. they do have reports on different -- it's one indication and the other is the massive number of complaints. >> the chair will now recognize -- for five minutes of questions. >> thank you, mr. chairman. these credit reports give lenders insight into how much the borrower has to pay back the loan. if the potential borrower your -- the prospect of payback is less certain. this results in higher pricing or even unwillingness to extend credit at all. in other words, -- >> mr. mooney, would you please check to see if you have muted yourself? mr. mooney, we cannot hear you. would you please check again to see if you can use it yourself? >> it's not on mute. can you hear me now? >> we can hear you now and i will extend your time by 30 seconds. >> can you please tell us what will happen to the cost and availability of credit if we were to suppress adverse information on credit reports. >> thank you, congressman. i think two things would likely occur in that case. one is the cost of credit would increase as lenders prized, as you say, for the unknown, for the risk, and secondly, i think there would be a contraction of credit lender -- lenders would be less willing to lend to marginal borrowers because they would not have that insight into exactly how that borrower might perform. so i think that risk based pricing does result in lower prices for many consumers, but it also greatly expands the universe of potential borrowers because you are able to price appropriately for risk. >> next question, your testimony listed past instances when either rhett -- legislative or regulatory changes lead to improved accuracy on consumer credit reports. do you have any policy recommendations to improve credit report accuracy going forward? >> well, we've seen a lot of work going on these last few years, particularly with the advent of the consumer protection bureau. this is the first regulator with investigative authority so whereas the ftc could investigate issues of accuracy the examiners at the cfpb are down there daily looking at the operations of the consumer reporting agencies and working with him to find ways to improve accuracy. this is an ongoing process that frankly is usually outside of the public view and is made a lot of strides in improvements to the processes and systems. they are going to look at different methodologies, hopefully faster than the 10 years that ms. wu referred to to be able to conduct a study on this and look for these improvements. >> the chair now recognizes the gentleman mr. garcia from illinois for five minutes of questions. >> thank you mr. chairman and the ranking member and thanks to all the witnesses. the reality is that people and working-class communities like mine and the district i represent worry a lot about their credit score. it is hard enough to rent an apartment, get a job, or by house, and a low credit score can lock people out of building a better future for themselves and their families. in normal times it is concerning, but right now all congress and the white house are focused on building back better and promoting equitable covering from the covid-19 pandemic, these barriers are a real policy problem. we talked today about the inadequacy of the dispute resolution process at the credit rating agencies, and error on someone's credit report can wreck their financial future. but existing dispute processes are two automated and frequently signed with the lender or furniture instead of the subject of the report. we've known this problem for years. the question of the representatives from the facts and experience. have your companies worked together to address issues in your dispute resolution process, and please be mindful that the clock is running pretty quickly here. >> the dispute process is a very important process for consumers and we have three ways that a consumer can engage with us around disputes. an online dispute process which gives them the ability to track exactly where the dispute is. they can dispute by our contact centers and by mail. we work directly as an intermediary consumers as well as with furniture's to do our best to rectify and resolve that dispute quickly. we actually have the ability if we have the right information to resolve a dispute and assist the consumer without going through the furnisher. we also can work directly with the furnisher through an investigation. in 2015 we agreed with the other bureaus to work together to share across information on dispute so that we do actively compare and contrast notes and information so that we do a very good job on behalf of the consumer. >> can we let sandy anderson also take a crack at that? >> similar to what ms. anderson at echo facts stated, we have similar processes. we look at how we improve the dispute process, allow consumers to reach out to us in their channel of choice, and we also look for ways that we can resolve that dispute directly with the consumer and going to the data furnisher. >> and have you discuss implement and stronger sanders across the industry to help decide when to investigate a claim might -- made by furnisher? >> we continue to look at how we do that as an industry. >> ms. wu, do you think that the industry takes dispute resolution issues like parroting seriously? can companies improve the dispute resolution process themselves, or do you think that an independent body or stronger standards would help consumers straighten out issues? >> thank you, congressman garcia. i think we need an independent body. the incentives are always for the credit bureaus to side with the furnisher's. those are their customers. the idea that there's any competition for consumers, it doesn't exist. if i am on hop -- unhappy with facts because they gave my data away in a data breach, still can't walk away from equifax. meeting an independent body, either in ombudsman person at the cfpb and ftc or ideally a public credit registry would give us a lot more control. one more thing on this risk-based pricing issue, just remember, risk-based pricing caused the mortgage crisis of 2008-2009. >> thank you very much. no further questions. >> mr. cruz stop of tennessee will now be heard for five minutes. -- mr. kustoff of tennessee will be heard for five minutes. >> we know that identity theft and breaches have been well covered by this committee but i think one thing that all three of the credit reporting agencies recommend is for individuals that they choose to do it our credit freezes. and i will say to all of your credit, i think you've made the process of requesting a credit freeze save. you made it reliable, and while there are number of checks and balances that can be done fairly expeditiously. the same is probably not true for children. in other words, those under 18 years of age. my question to you is, actually two questions. one is, when would you recommend a credit freeze for a child, and then secondly, what if anything can be done by your agency and others to make the process easier to request a credit freeze for a child? and that's to mr. danna her. >> sorry, i didn't hear that. yes, we believe that the process for adding a credit freeze to a minors credit file or preventing a credit file from being opened for a minor until they are of age, i think it is 16 on our system, can be made easier. and we are currently wrestling with that right now. the issue for us is proving who can set a freeze for a minor. in other words, verifying the identity of the person trying to set the freeze. whether it's a parent, guardian, etc., like knowing the relationship between the person trying to set the freeze and the minor can -- currently right now we have to ask for documentation on that and people submit manual documentation so that we can verify that is being set by the appropriate person. but we are looking at ways to automate that and make it easier for parents, guardians, etc., to protect the identities and the credit files of their minor children. >> to ms. anderson of experian, i will ask you the same question. is there an easier process, or are you looking at an easier process to place credit freezes on the benefit of children? >> there is always room for process improvement and we certainly take that seriously and continue to look at it. but just as a reminder that the display of anybody under the age of 18 is blocked, so that information would not go out of our system, even if it was in the system of record. >> with the children still be at risk of identity theft if the record was not frozen? >> there is always the risk of identity theft with fraudsters getting access to personal pii, but getting access of that data from our system, we don't release that data until they are 18. >> if i could ask a different question, i'm referring back to your written testimony. you do know that the credit scores during covid get a historic high, i think you said it was around 710 or 711, and you cited some of the reasons. you at a fax, do you project over the next 6-12 months whether that trend will continue? >> well certainly we did in fact see credit scores improved over the covid timeframe and believe that as long as the consumers have access to the kinds of protections that we have seen during the cares act, we imagine that that behavior could in fact improve. of course i don't want to sit here and forecast what the future looks like, but certainly we believe that the economy is recovering, consumers feel positive about where things stand relative to covid. jobs are starting to return. so we definitely feel positive. >> the gentleman's time has expired. the chair has an announcement that the chair will step away and in the absence of the chair, the gentlewoman from georgia, ms. williams, the vice chair, will assume the position of chair. i have ms. garcia of texas next and after that mr. timmons of south carolina. thereafter you would recognize yourself for five in its and perhaps i will be back before that time, but if not, you will recognize me after you have recognized yourself. i yield now to ms. garcia of texas for five minutes, and madam chair, i shall return. >> mr. chairman and madam chair now, thank you for bringing us to talk about such an important issue. this is an issue that i've cared a lot about going back to my legal aid days when i had occasion to call the national consumer law center and i can say that there were always very helpful in getting some of guys getting -- getting to some of our clients issues. credit scoring is a fundamental part of our economic system. a credit -- access to credit means access to building wealth. this system is founded on the idea that it is fair and accurate but recently we found a series of problems with disputes and inaccuracies. i realize that sometimes these things to happen but it is important that we get to the bottom of this to ensure that it doesn't happen to the degree that it hurts consumers. mine is a working-class district. many people in my district don't understand the processes of the consumer credit agencies. they don't understand what credit scores mean. so it really keeps them away from the marketplace. you have told us some of the stories and in my district, because it is a 77% latino district, very high spanish-speaking, limited english illiteracy. can you describe what legal framework exist to protect those who are subject to even more information challenges than the average consumer? >> that's a great question, thank you. the fundamental problem is this. credit reports are not available in language other than english. we have sent letters to the credit bureaus asking them to please translate the credit reports. it should be easy in this day and age of automatic translation and then having someone go through it to check everything, and we got a big fat know from the credit bureau that they wouldn't translate the credit reports. how are you supposed to monitor and keep track of your credit, check for errors and disputes if you can even read the information? equifax to its credit did say they are looking into it, but otherwise, a big fat no. >> well, let me ask each and every one of them. is it true equifax is thinking about it or is already doing it? >> i represent experian, but for us, we currently don't offer credit reports and any other language other than english today. we do have spanish-speaking agents that consumers can reach out to and discuss the credit report and questions. so we do provide that. we also work with different community groups that provide financial education services in the consumer's native language. >> all right. now let's ask the other anderson. >> thank you, congresswoman. we are very close to launching our first spanish credit report. we are excited about the work that we are doing there. in the meantime we have spanish agents in our call centers and translation language vendors help us when we have consumers who need additional support from a language perspective. >> congresswoman, we do make credit reports available both in english and spanish. we also have spanish-speaking customer support agents who will answer any questions somebody may have in spanish. as we talked about when we met earlier this week, we are also looking at prioritizing other languages and trying to figure out what the demand might be for consumers to see their data in languages other than english and spanish. >> there are studies that have found that there is disparate treatment of minorities and certainly the recent complaint bulletin that was issued by the consumer financial protection bureau just last month clearly showed that in 2020, the cfpb received more complaints per capita from consumers living in predominantly minority counties and from 2019-2020 complaints increased at a greater rate in predominantly minority counties compared to predominantly white non-hispanic counties. i mean it is there, we've got to do something to do better. i want to ask unanimous consent to submit for the record a copy of the complaint bulletin outlining some of the items that i just mentioned. with that i yield back. >> thank you, ms. garcia, and your questions will be submitted for the record. my document is approved for the record? >> without objection. >> thank you, ma'am. i yield back. >> the chair now recognizes mr. timmons from south carolina for five minutes. >> thank you. first i want to point out that risk based pricing definitively did not cause the financial crisis of 2008. in fact, it was the absence of accurate risk-based pricing the distortionary influence of government policy subsidizing credit in ways that conceal the real credit risk that encourage lenders to put people in homes with mortgages they couldn't afford. given the data breaches in the past and particularly the ransomware attack involving colonial pipeline, i would imagine cybersecurity is top of mind for your institutions. can you describe the increased security posture you put in place after the equifax breach and describe your efforts to make sure all consumer credit information is kept safe and secure? >> i will start since you referenced the equifax breach. i would like to say that equifax is certainly focused on security and believe that the work we have done over the course of the last several years puts us at the forefront of being an industry leader in security. we spent a billion and a half dollars over the last three years delivering top-notch security and i.t. infrastructure into a cloud native environment and multimillions of dollars creating a security response and monitoring system. we've hired a number of security experts in our company and we've made security a core tenet to our culture. most recently we were -- produced a report called right site that indicated that our company is in the top 3% of security of the top 1000 largest u.s. firms. so we are excited about the work we have done to secure our customers and consumers data. >> i will open this up to anyone else. my second question is going to be a -- about increasing the patchwork framework of data privacy and security regulations at the state level across the u.s. your company's concern that privacy and security compliance costs are going to increase and would you prefer congress to preempt states to create one nationwide standard? >> i will take that one. thank you for the question. a nationwide standard would make it easier to figure out when consumers need to be notified in the event of a breach. but all of the consumer reporting agencies comply with federal standards for data security to ensure the security of information of matter where consumers are located. >> with the others want to weigh in as well? >> we would support a federal privacy law. >> yes, we agree too. it's easier for us and more productive to manage to one standard rather than 40 or 50. >> i'm interested, when you consider your cybersecurity budget do you consider the compliance costs associated? i think that should be a part of it, when you have to hire an army of attorneys to comply with all the various privacy and data security regulations it really adds up to a lot, so i appreciate that. before i close i want to respond to the gentleman from michigan who was litigating the practice of auto insurers using credit scoring data in their underwriting. the average auto rate in michigan is $2300 a year versus just $1500 a year in south carolina. where this underwriting factor is used, insurance is a highly regulated business on the state level. >> the chair thanks the vice chair for standing in in my absence and now the chair is honored to recognize the vice chair for five minutes of questions. >> according to a recent bulletin consumer complaints rose across the board between 2019 and 2020 but at an even faster rate in predominantly nonwhite counties. earlier this month i authored and passed an amendment on the house for that will study this kind of disparity and provide policy recommendations to ensure greater equity. how important is it to analyze and address racial disparity to advance the broader goal of creating a more consumer friendly financial marketplace? >> it's absolutely critical and is probably the most important issue facing credit reporting and credit scoring. the fact that there are vast racial disparities in credit scores, the urban institute found that more than 50% of white households have a fight go store above 700, compared to only 20% of black households. that's why the practice of using credit scores for auto insurance hurts black consumers more and that's why errors affect minority communities more because folks who have lower credit scores are more prone to errors in their credit report, and that makes sense. if you have an 800, that means you have a perfect credit record and you are not going to get errors. so the racial disparity should be top of mind for anybody cares about racial justice. >> you mention how important it is to take the pandemic impact into account when it comes to negative credit reporting. currently the law or via set a federal student loan borrowers credit score cannot be negatively affected if they miss federal student loan payments during the pandemic. i recently worked with my colleague to pass an amendment to provide student loan borrowers the same relief that from private student loans. how would providing all student loan borrowers equitable relief and credit reporting during the pandemic help everyday folks who've experienced financial disruption and are struggling to get back on their feet? >> it certainly would help. borrowers with private student loans should have the same protections as borrowers with federal loans. the cares act protection didn't even cover all borrowers with federal loans. so it is important that all of them got relief given the economic dislocation caused by the pandemic. flipping through the crack's happened with federal student loan borrowers. that's why we have advocated for a negative moratorium on pandemic related, a negative information during the pandemic because of the severe nature that economic dislocation of the cares act provisions are complicated and we've seen a lot of creditors mess up on them. that's actually what the slipping through the crack's that ms. beverly anderson warned about has been happening. >> the gentlelady yields and the chair now recognizes mr. gottheimer for five minutes. >> thank you to our witnesses for being here today. the united states is the most credit fraud prone country in the world. every year 15.4 million americans are victims of credit card fraud, or around 42,000 people every single day. one in 20 consumers have errors so serious that they can denied credit or forced to pay higher interest rates. scams typically increased during times of crisis and the covid-19 pandemic has been no exception. i think we can all agree it is more important than ever that all americans have equal and just access to credit. your company experience joined transunion and facts and announcing that americans would be able to access their credit report for free on a weekly basis. why does your company still choose not to give americans unlimited free access to their reports? >> thank you for that question. we do provide access to free credit reports on a weekly basis as an industry. experian also provides free access to credit reports and free credit scores to over 40 million u.s. consumers today and we continue to grow that as consumer needs arise. i can't speak for the other two, but certainly experian is expanding our free offering to consumers. >> so during the pandemic everyone has been able to access their credit free on a weekly basis? >> correct. >> you been concerned about credit issues and americans having access to their credit. >> we been concerned about the impact of the pandemic on consumer credit reports, especially debt collection items. we have heard that scores have risen. if you have some scores that go up and some that go down, on average, you may get the same scores or a slight uptick. but what i'm worried about is the 8-10 million renters who are facing eviction who may then face debt collection items for back rent. that's going to hurt their credit reports. medical debt, a lot of people lost their employer-provided health insurance. it hurts your ability to get credit, housing, and employment. these are some of the things i worry about. i commend the credit bureaus for providing credit reports once free per week. i think it should be permanent. i think it is a great idea. >> do you agree that we should make it easy for americans to get their information for free and initiate disputes when it comes to credit given how important the credit information can be on every aspect of peoples lives from what they pay for insurance to their mortgage, you name it. >> absolutely, it should be easy and it should be fair. you need the credit scores to know where your credit standing is. it shouldn't be just the one credit score that lenders use the most often. credit bureaus are developing all these new products and these new scores that judge consumers. all of those should be available . health care scores, fraud risk scores, tenant screening scores. and when you dispute you should be able to get a fair determination and not always side with the furnisher. >> i think you are referencing the protecting your credit score act. it creates an online per portal -- an online portal to provide americans with free and unlimited access to their credit reports, credit scores, credit freezes and the ability to dispute errors and fraud. you make a great point on making sure it is all the scores, not just one, so they cannot create other ways around it. i think the witnesses for being here today. >> the chair now recognizes himself for five minutes of questions. permit me to ask the witness is to comply in the following fashion. i shall pose a question and i will ask that you simply raise your hand if you understand the question as i have posed it, or if your answer is to be yes or no and i will be sure to be clear as to whether i want you to raise your hand if it is yes or no. i assume you're very much aware of this given that you're at the hearing, review aware of the style of this hearing today, the style of consumer credit reporting assessing accuracy and compliance? are you aware -- the record will reflect that all the witnesses are aware prior to today. is it true that as a major business you maintain record so that you can ascertain the accuracy rate that you have within your business? if you believe that as a major business you should do this, would you kindly raise your hand? maintain your accuracy rate. i see one hand. i don't see the thirdhand. oh i do see. all the witnesses agree that they should maintain an accuracy rating. would you kindly now tell me what your accuracy rate is? let me start with sandy anderson. >> we track a number of metrics to determine accuracy rate and right now we're tracking it at over 99%. >> and what metric is that? >> that's our accuracy metric that we use to track material errors and credit reports as they are used by lenders and consumers. >> i'm to understand that with reference to your errors your 99% accurate in terms of the information that you provide. >> correct. >> the question is the same to you. >> our analysis shows that credit reports are 98% accurate with regard to material accuracy. so 2% errors or so of credit reports are inaccurate with material consequences for the borrower. >> thank you. let me move now to ms. beverly anderson. >> the last accuracy data measured by the csv happened in 2012. we know there is another report that they would like to have two update the accuracy data and we welcome this study. we have a number of measures in our business that measure the accuracy of our data furnisher. the level of disputes. >> i will have to intercede. i need to know what your accuracy rate is. you've acknowledged that you knew what we were going to discuss today and your 2012 data probably is a little bit outdated, but what is your accuracy rate, please? >> our data will be similar to the other two bureaus. >> what does similar mean in terms of a number, please? >> i will have to get back to you with a number. >> i will -- i would ask that you do so and express my dismay that you're not prepared given that you were well aware of the style of this hearing and what i would be asking. i may go on to something else. minorities seem to have higher in accuracy rates or error rates than others in this business. do you keep a record of the accuracy rate as it relates to minorities? let me start with you, ms. anderson. do you keep such a record? beverly anderson. can you hear me? >> yes, i can. we do not have race data on our files. >> no, mr. chairman, we don't have any insight into the race of the people on the credit file with regard to accuracy. >> and the other anderson. >> no, we don't have race data in our credit card. >> let me thank the witnesses for their testimony and for devoting the time and resources to share their expertise with the subcommittee. your testimony today will help to advance important work the subcommittee and of the u.s. congress. the chair notes that members may have additional questions for this panel which they may wish to submit in writing. without objection, the hearing record will remain open for five legislative days for members to submit written questions to these witnesses and to place the responses in the record. also without objection, members will have five legislative days to submit extraneous materials to the chair for inclusion in the record. i remind members to submit written questions and materials for the record to the email address provided to your staff. i would also, while it is after-the-fact and a little bit late, remind members that we are not to address our comments to other members but rather to the chair. with this said, this hearing is. parents of children who died

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