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New credit law proposal

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sjt
Senior Contributor

Re: New credit law proposal


@pipeguy wrote:

@gdale6 wrote:

New bill on this   https://consumerist.com/2016/05/19/bill-would-overhaul-credit-reporting-system-remove-debt-after-fou...


I'm not going to be very specific due to political considerations on MyFico, I'll just say that in election years there is a lot of "messaging" that goes on. As far as I can see this is "draft legislation" meaning they are floating a trial balloon - I'll follow up after I check a few things, but I'd be very surprised is this issue got any traction this late in the 114th Congress

 

Edit - Add:  After checking filing records, the original draft legislation talked about in 2014 was never filed (aka trail balloon), the NEW reported measure, H. R. 5282 was filed on May 19, 2016 in the House with no co-sponsors and no matching Senate version. The text of the bill is not available (published) yet but should be up in a couple of days.

 

If you'd like to check on this bill, you can use the public site Congress.gov and search on H.R. 5282. Keep in mind that if it does not move out of committee by the end of the year, it's dead unless it's reintroduced in the 115th Congress after the beginning of next year (and) its a short year since Congress is out of session from mid-July through the beginning of September and all of October.   


Even if the bill gained traction it would be watered down, as when a bill is introduced they always ask for everything.

Lets say the bill did become law as is, dont you think FICO and other scoring systems would adjust their methods. For instance, if you can remove negative information by paying the debt dont you think the new scoring would put more weight on AAOA?

 

 

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Message 11 of 15
mitchblue
Valued Contributor

Re: New credit law proposal

I don't know?  If they want everyone to have better credit then the people who have better credit already doesn't stand out as much. And imo, CCC will make it harder to achieve the credit we want and harder to get the interest rates we want.

FICO® 8 Scores 821 FICO® 9 Equifax 826 (Updated 02-7-23)
Message 12 of 15
Anonymous
Not applicable

Re: New credit law proposal


@sjt wrote:

 

Even if the bill gained traction it would be watered down, as when a bill is introduced they always ask for everything.

Lets say the bill did become law as is, dont you think FICO and other scoring systems would adjust their methods. For instance, if you can remove negative information by paying the debt dont you think the new scoring would put more weight on AAOA?


I agree, if it did take hold, then FICO and Vantage would probable increase the weight on AAoA as well as number of tradelines/credit mix.  

Message 13 of 15
Revelate
Moderator Emeritus

Re: New credit law proposal


@EW800 wrote:
I believe PipeGuy is correct. I'm not real optimistic about this making it, however I will share that I personally hope that the seven year rule for most baddies is looked at some day. In my opinion, that is a loooong time. I've always felt that five years was a more realistic period of time.

I am guessing the lending institutions would fight this? I assume they figure longer the better.

Maybe, I think lenders would generally prefer to have more data rather than less to base their lending decision on, but it seems pretty clear based on people's credit successes on this forum that outside the score depression factor many lenders don't really care about old settled debts... that's even true in the mortgage process which is the most documentation-oriented section of the credit market as a whole.

 

My own journey isn't necessarily representive but I've had tax liens, collections, and late payments on my report since I started here, and I've only been denied a CLI previously.  Well I had to recon my Freedom but that doesn't count Smiley Happy.

 

There's another unintended consequence to this which I haven't seen mentioned in any article: lenders re-evaluate their score thresholds with every new model, if we had a sweeping change such as this to reporting timelines, they'd re-evaluate everything for what FICO scores they require: I would expect a non-trivial revision upward for many if not most credit products in the market as right now they have to take into account that people with years of good history after some trouble can be good borrowers and shouldn't be flushed on the initial FICO hurdle and sorted out by UW later.  If suddenly they're gettnig many more responses through to UW...

 

Anyway it might take a while for the data to show it, but it'll change: no different than the generalized market evaluating me on a 700-720ish FICO score these days, if suddenly I'm swinging with my 790 on FICO 9, yeah well expect things to be a little different vis a vis 760 may not be the gold standard anymore.




        
Message 14 of 15
Anonymous
Not applicable

Re: New credit law proposal


@EW800 wrote:
I believe PipeGuy is correct. I'm not real optimistic about this making it, however I will share that I personally hope that the seven year rule for most baddies is looked at some day. In my opinion, that is a loooong time. I've always felt that five years was a more realistic period of time.

I am guessing the lending institutions would fight this? I assume they figure longer the better.

Agreed, people mess up when their young but after that time, they looking at new car, home ownership etc and making payments on time.

Message 15 of 15
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