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Rep. Beatty Wraps Financial Literacy Month with Credit Reforms to Empower and Protect Consumers

April 30, 2024

WASHINGTON, DC To mark the end of Financial Literacy Month, Congresswoman Joyce Beatty (OH-03), co-chair of the Congressional Financial Literacy and Wealth Creation Caucus, reintroduced two credit reform bills to empower consumers and protect them from unfair lending practices: the Free Credit Scores for Consumers Act of 2024 and the Examining Educational Redlining in Lending Act

 

The Free Credit Scores for Consumers Act aims to include a clear explanation of credit scores in free annual reports, closing a gap in existing law. While free annual reports provide consumers with all the information contributing to their credit score, they do not include the actual score or an explanation of how it’s calculated from the report data. The legislation expands consumer rights by codifying access to an annual free credit score and the disclosure of critical information needed to manage one’s credit profile.

 

The Examining Educational Redlining in Lending Act addresses “educational redlining,” by which a financial services firm uses an applicant’s educational background to determine creditworthiness, particularly for private student loans. This disproportionately impacts borrowers from Historically Black Colleges and Universities (HBCUs), Hispanic-Serving Institutions (HSIs), and community colleges, potentially perpetuating systemic racial bias and economic exclusion. The legislation requires the Consumer Financial Protection Bureau (CFPB) to issue a public report evaluating lenders’ use of consumer educational data in their underwriting processes.

 

Good credit lies at the core of financial success, so it is essential that every consumer has access to their credit score, understands what goes into that score, and recognizes how financial services providers use their credit information to make lending decisions,” said Congresswoman Beatty. “That is why this Financial Literacy Month I reintroduced two critical credit reform measures. The Free Credit Scores for Consumers Act will arm American consumers with the information they need to manage and improve their credit score, while the Examining Educational Redlining in Lending Act will root out discriminatory practices in credit underwriting.”

For inquiries, please contact Cassandra Johnson at Cassandra.Johnson@mail.house.gov.

 

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