This testimony examines two very different approaches to change the credit reporting system. One approach — that advanced by H.R. 2086 as well as its Senate version S. 2149 — is to removed paid or settled medical debt under $2,500 from credit reports. This approach will tremendously benefit consumers, and indeed is probably the simplest and easiest “quick fix” out there to improve the credit records of millions of Americans, enable them to access low interest rates, and spur economic growth.
The other approach — that advanced by H.R. 6363 — is to encourage utility companies to report payment information on a monthly or regular basis to credit reporting agencies, i.e., “full file utility credit reporting.” The approach raises serious concerns for us. We fear that it will add millions of new negative reports to the credit reporting system and will actually harm many consumers, especially financially strapped consumers, by creating credit black marks. We are also concerned that it will undermine long-standing protections developed by state regulatory commissions across the country. Full file utility credit reporting could also hurt job seekers when employers use credit reports, and consumers when they buy home or auto insurance. We are not alone in our concerns, as the National Association of State Utility Consumer Advocates and other groups have expressed similar fears.