The companies that determine Americans' credit scores are about to come under government oversight for the first time.
The Consumer Financial Protection Bureau (CFPB) said Monday that it will start supervising the 30 largest firms that make up 94 percent of the industry. That includes the three big credit reporting firms: Equifax Inc., Experian, and TransUnion.
In remarks prepared for a speech Monday, Richard Cordray, the government agency's director, said that scorekeeping by credit bureaus plays such a large role in Americans' financial lives, it requires scrutiny. (You may recall President Obama had to circumnavigate Congressional authority in order to get Cordray his consumer watchdog position.)
President Barack Obama shakes hands with former Ohio Attorney General Richard Cordray after announcing his nomination to serve as the first director of the Consumer Financial Protection Bureau (Manuel Balce Ceneta/AP File)
Lenders, like banks or auto finance companies, use credit scores to measure eligibility for mortgages, credit cards and a wide variety of other consumer loans. Low scores based on missed or late payments, for instance, can mean higher interest rates or rejected applications.
There have been thousands of complaints about the bureaus by consumers who claim they are unsuccessful getting credit reporting agencies to correct inaccurate information contained within credit reports.
So let's get the feds involved, right? Again, what could possibly go wrong?
The protection bureau will start regulating the industry after the new rule takes effect on Sept. 30.
The Associated Press contributed to this report.