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Credit Firms Attempt to Clean Up Act : Reforms: Consumer complaints prompt industry to take self-imposed steps, but critics say government regulation still needed.


The nation's much-maligned credit reporting industry Monday outlined self-imposed reforms, which critics said are designed to head off increased government regulation.

Associated Credit Bureaus Inc., an industry group whose largest members are TRW, Equifax and Trans Union, said the reforms would make it easier for consumers to obtain and correct their credit records.

The reforms, which take effect July 31, would also impose restrictions on how companies that buy and sell credit reports use consumer credit information, the ACB said.

Many of the industry's voluntary reforms are contained in federal legislation proposed by Rep. Esteban Torres (D-Pico Rivera). The legislation is endorsed by leading consumer organizations seeking mandatory reforms to prevent reporting errors that have resulted in consumers being denied loans, homes and jobs.

"We don't feel voluntary standards are enough," Consumers Union attorney Michelle Meier said. "What the credit bureaus do today they can undo tomorrow. We need legislation to make the reforms stick."

A spokesman for Torres called the reforms a "good first step," but said they would not derail the legislation, introduced earlier this year. The spokesman said the ACB can't enforce the reforms if individual bureaus or some of their customers don't go along.

The reforms don't provide for a free annual report on request for consumers--a major component of the Torres bill--but they go beyond the steps already taken by individual credit bureaus.

The reforms announced Monday also extend to the 900 smaller credit bureaus that collect credit information on consumers from banks, department stores and finance companies. The key reforms are:

* Credit bureaus will charge a consumer no more than $8 for each credit report, and will mail it to the consumer within three days after a request is received.

* Credit bureaus will complete investigations of disputed material within 30 days and send the results to consumers within five business days.

* Credit bureaus will require employers who order credit reports to notify job applicants. A spokesman for the ACB said this reform will give applicants a chance to correct any erroneous information before the hiring decision is made.

* Credit bureaus will monitor how brokers and sellers of credit information market reports purchased from credit bureaus. The ACB spokesman said this is intended to prevent divorce lawyers, private investigators and others from illegally obtaining credit reports.

The industry's move to clean up its act comes after a lengthy controversy over its record-keeping practices. In congressional hearings two years ago and in dozens of lawsuits across the country, consumers have said mistakes in their credit reports cost them jobs and much-needed loans.

The industry's track record has improved--partly a result of pressure from law enforcement officials in California and several other states. To settle lawsuits filed by state attorneys general, the three largest bureaus agreed to respond to consumer complaints promptly--usually within 30 days. The bureaus also agreed to make credit reports easier to read.

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