WASHINGTON—At the same time credit disputes becoming a growing problem for banks and credit unions alike, weaknesses in the U.S. credit reporting system are limiting access to credit for many consumers, even as lawmakers consider legislation that critics warn could weaken protections, witnesses told a House Financial Services subcommittee hearing.
During the hearing, titled “Promoting Access to Credit for Everyday Americans,” industry executives and consumer advocates described a system that remains essential to lending but is under increasing strain, according to reporting by PYMNTS.
At issue is the gap between the accuracy of credit data and real-world financial outcomes. When data is reliable, lenders can extend credit more broadly and price loans more precisely. When it is flawed or incomplete, access tightens and borrowing costs rise, witnesses said, PYMNTS reported.
Growing Volume of Disputes
A central concern is the growing volume of disputes in the credit reporting system, according to the report:
- Industry representatives said creditors now face large numbers of potentially fraudulent or duplicative disputes, which can overwhelm systems and delay resolution of legitimate claims.
- Banks reported that investigating disputes requires significant resources, often relying on manual processes that strain compliance operations.
- Consumer advocates countered that the dispute system frequently fails to correct errors, allowing inaccuracies to persist.
Role of Alternative Data
The hearing also examined the role of alternative data—such as utility payments, telecommunications records and cash-flow information—in expanding credit access:
- Supporters said broader data could help “credit invisible” consumers gain entry into mainstream lending.
- Lawmakers and advocates cautioned that such data could introduce risks, including potential discrimination or added financial pressure on struggling households.
Fraud and identity theft were also highlighted as key threats. Witnesses said false claims and coordinated dispute activity can distort credit profiles, making it harder for lenders to assess risk accurately and potentially leading to tighter lending standards, PYMNTS reported.
Sharp Divisions
Testimony revealed sharp divisions over how to address the system’s shortcomings:
- Some industry representatives called for aligning liability standards under the Fair Credit Reporting Act to streamline dispute resolution and reduce litigation.
- Consumer advocates warned that limiting damages or restricting complaints would weaken incentives to correct errors and erode protections.
NCLC Has Warning
Those concerns were echoed and expanded upon by the National Consumer Law Center, which warned that legislation under consideration would benefit major credit reporting companies at the expense of consumers.
Chi Chi Wu, director of credit reporting and data advocacy at the NCLC, told lawmakers that four bills being reviewed would harm households already facing rising costs and financial strain.
“These bills provide a potpourri of giveaways to Equifax, Experian, and TransUnion, the Big Three credit bureaus, the single most complained about industry in financial services,” Wu said in a statement, citing data from the Consumer Financial Protection Bureau showing it received 5 million credit reporting complaints in 2025.
Wu argued that inaccuracies in credit reports—whether due to errors or identity theft—can have severe financial consequences, including higher borrowing costs or denial of access to credit. Such issues can also affect employment opportunities, housing access and insurance eligibility.
‘Serious Harm’ Alleged
“Credit bureaus, employment background check agencies, tenant screeners, big banks, and debt collectors inflict real and serious harm on people when they report inaccurate information,” Wu said.
During her testimony, Wu cited the case of a veteran who was unable to complete a home purchase after Equifax allegedly mixed his file with others of similar names and failed to correct the errors. According to Wu, the man had already sold his home and struggled to find rental housing that would accommodate his pets, ultimately leading to the euthanizing of two dogs.
Opposition to 4 Measures
Wu outlined opposition to four specific measures:
- H.R. 5775, the FCRA Liability Harmonization Act, would eliminate punitive damages under the Fair Credit Reporting Act, reducing accountability for companies even in cases of serious violations.
- H.R. 5402, the Credit Access and Inclusion Act, is promoted as expanding credit-building opportunities through rent and utility payments but would override certain state and federal consumer protections and could harm financially strained households, Wu said.
- H.R. 8141, the Fair Credit Reporting Reseller Accuracy Act, would shield data resellers from liability if they pass along incorrect information without altering it, even when inaccuracies are apparent.
- H.R. 7588, the Eliminating Fraud in the CFPB’s Complaint Database Act, would restrict public access to complaint narratives, impose additional hurdles for filing complaints and give companies broader authority to reject them.
Wu urged Congress to instead pursue reforms aimed at strengthening oversight of credit reporting agencies and to consider creating a public credit registry to provide an alternative to what she described as an “oligopoly” dominated by the three major bureaus.
