[Congressional Record Volume 140, Number 148 (Wednesday, November 30, 1994)]
[Extensions of Remarks]
[Page E]
From the Congressional Record Online through the Government Printing Office [www.gpo.gov]


[Congressional Record: November 30, 1994]
From the Congressional Record Online via GPO Access [wais.access.gpo.gov]

 
              FTC PROPOSAL ON DISCLOSURE OF CREDIT SCORES

                                 ______


                     HON. ALFRED A. (AL) McCANDLESS

                             of california

                    in the house of representatives

                       Tuesday, November 29, 1994

  Mr. McCANDLESS. Mr. Speaker, as the ranking Republican member of the 
Subcommittee on Consumer Credit and Insurance of the Banking Committee 
during the 102d and 103d Congresses, I have devoted a considerable 
amount of time on legislation to amend the Fair Credit Reporting Act. 
In this Congress, those efforts led to legislation which was passed by 
the House of Representatives sent to the Senate for final approval 
prior to adjournment in October. However, the Senate was unable to act 
on the legislation in October and it now appears unlikely that they 
will consider FCRA legislation during the lameduck session.
  Toward the end of the 103d Congress, the Federal Trade Commission 
announced a proposal to amend its commentary interpreting the FCRA. The 
proposal would require credit bureaus to make certain credit score or 
risk score disclosures under section 609 of the FCRA. Such scores are 
calculated using a formula or so-called scoring model which is 
designed, through statistical analysis of past experience with 
consumers, to assess the relative statistical significance of 
individual pieces of financial data. Risk scores are calculated by 
applying such formulas to pieces of information about a consumer's 
financial background to estimate the relative risk that the consumer 
presents in connection with a particular transaction or contemplated 
relationship. Mr. Speaker, because of my involvement with this issue, I 
believe that the FTC's proposal is inconsistent with the current 
language of the FCRA and with the conclusions we reached during our 
deliberations on amendments to it.
  The current language of section 609 of the FCRA requires a credit 
bureau, upon request, to disclose to a consumer the nature and 
substance of all information the credit bureau has in its files on the 
consumer at the time of the request. Over the years that we have been 
considering legislation to amend the FCRA, there has been considerable 
debate and deliberation on proposed amendments to section 609. Those 
discussions have included proposals to require credit bureaus or others 
to disclose to consumers credit or risk scores which are calculated 
based on information contained in a consumer's credit bureau file. 
However, each time that such proposals have been considered, we 
discarded them. Such disclosures were rejected because they are largely 
unworkable, costly, and would not provide any meaningful benefit to 
consumers who already are entitled under section 609 to disclosure of 
each component of their files upon which such a credit or risk score 
might be based.
  Accordingly, from the perspective of one who has been deeply involved 
in legislation to amend the FCRA, if in the unlikely event that it is 
deemed necessary and appropriate to expand section 609 of the FCRA to 
require credit bureaus to make credit or risk score disclosures to 
consumers, such a change should be implemented through a legislative 
amendment to the FCRA, not through a regulatory expansion of the FCRA 
as proposed by the FTC.

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