Congressman Chris Cannon
Statement before the Financial Institutions and Consumer Credit Subcommittee
H.R. 2856 the Fair Credit Full Disclosure Act
September 21, 2000

Thank you, Ms. Roukema and members of the Financial Institutions and Consumer Credit Subcommittee for holding this hearing on this important issue of consumer credit scoring.

I became involved with this issue a year ago when a constituent, Chuck Colebrook, called my office requesting help in obtaining access to all of the information on his credit report. Mr. Colebrook wanted to see his credit score and the economic indicators that creditors look at to judge his credit worthiness.

Under current law creditors and credit reporting agencies do not have to allow Chuck to see his credit score or risk predictors that are available to any creditor that looks at his credit file. Chuck and all of the rest of us as consumers are having personal information withheld from us.

The Credit score weighs heavily on a creditors decision as to whether or not to extend credit to a consumer for the purchase of a house or car, it effects the amount of credit extended, and the rate of interest a consumer must pay. While I believe that there needs to be a fair method of risk assessment for creditors, consumers should have access to the same information which pertains to them in such a personal way.

As a response to the request of Mr. Colebrook, and in an effort to bring this situation to light, last year I introduced H.R. 2856, the Fair Credit Full Disclosure Act. This simple bill will give consumers the right to see their credit scores and all of the information contained in their credit reports.

There has been a lot of activity in response to this legislation. Since the introduction of HR 2856, organizations such as Fannie May have announced that they have discontinued use of credit scores and developed their own system for measuring the risk of a consumer. Fair Issiac has announced that it will disclose what information is used to develop the credit score. As of yet however, consumers cannot see the actual credit score or the ratio's used to develop the score.

I have heard the arguments against disclosure of credit scores as well: Consumers won't understand the score; consumers will be able to fix their scores; where does the score reside; every creditor weighs the score differently. I believe that those who are making these arguments are seriously underestimating the intelligence of consumers and their level of frustration.

Consumers understand that they have a credit score that effects them. And yes, consumers want to be able to fix their credit scores. That is the point of this legislation. Consumers want to have the best credit score possible. Without the knowledge of what goes into the score, how can they know what they need to do to improve their credit risk? Currently, it is impossible to get a clear answer. For example, if a consumer pays his bills on time every month, will this persons credit score go up? Well, maybe. If a consumer only uses two credit cards instead of five, will the score go up? Well, maybe. If a consumer earns $60k instead of $40k will his score go up? Well, maybe.

Consumers should know what they need to do to become good credit risks. Educated consumers are a powerful force. They know what loans they best qualify for and where to get those loans. Knowledge is the best defense against problems such as predatory lenders or scam artists that are giving the financial services industry a black eye. We need to unlock the score. The time has come.

Thank you again Madam Chair for allowing me to testify on this issue.