Perhaps We Need CRA Reform?
An interesting press release from the National Consumer Law Center reports that the NCLC and five other consumer advocacy groups approached the "big three" consumer reporting agencies-TransUnion, Experian and Equifax-to get them to make changes in their credit scoring formulas in order to help out victims of Hurricane Katrina-many of whom will undoubtedly experience a reduction in their credit scores as a result of the hurricane. The consumer groups requested that the CRAs develop and retain a "pre-disaster information" credit score based on pre-Katrina credit information for people in the affected areas. Under this proposal, "creditors could still get a current credit score, but at least the consumer credit file would also show the credit score before any Katrina-related delinquencies began to be reported," said Travis Plunkett of the Consumer Federation of America. Clearly, an individual's pre-Katrina score is likely to be a better indicator of his or her future credit behavior than a score temporarily depressed by missed payments as a result of the hurricane.
You will not be surprised to hear that this proposal was not well received. Equifax and Experian both declined the request; TransUnion has not yet responded. How's that for helping out in a crisis.
