FAIR Credit Act

Key Points

• This bill would stop all medical debt from appearing on credit reports. The Consumer Bureau found that medical debt does not predict whether someone will repay a loan and can lower scores by up to 22 points even after it is paid. Removing it helps people get better rates on loans and housing.
• The time most negative information can stay on a credit report would drop from seven years to four years, and bankruptcies would stay for seven years instead of ten. This helps people recover from financial setbacks faster and access credit sooner.
• Victims of predatory mortgage lending and borrowers defrauded by for-profit colleges could have related negative marks removed from their reports. Survivors of economic abuse could also remove debt an abuser ran up in their name, without needing a police report.
• Credit bureaus would have to remove fully paid or settled debts within 45 days. Right now, paid collection accounts can linger for years, so this lets a person's score start improving almost right after they settle a bill.
• Certain groups would get free credit monitoring and identity theft protection, including people 65 and older, active duty military and National Guard, the unemployed, and public assistance recipients. Parents could also freeze a child's credit even when no file exists yet.
• Credit scoring models and lenders would be barred from treating a consumer's participation in these credit restoration programs as a negative, so using the relief cannot itself hurt someone's score or loan terms.