House subcommittee weighs FCRA changes, CFPB complaint limits

The House Financial Services Subcommittee on Financial Institutions held a hearing on Thursday morning examining ways to expand access to credit, with lawmakers also considering several bills aimed at reshaping credit reporting rules and consumer protections.

The hearing, “Promoting Access to Credit for Everyday Americans,” comes as policymakers continue to weigh changes to the credit reporting system amid ongoing debates over consumer access to credit and regulatory oversight of financial institutions.

The conversation focused on a slate of Republican-backed bills to amend the Fair Credit Reporting Act (FCRA), expand the use of alternative data in credit files and tighten controls on complaints filed with the Consumer Financial Protection Bureau (CFPB).

In addition to the hearing, the subcommittee will consider several pieces of legislation related to credit reporting and consumer protections.

Witnesses included Dan Smith, president and CEO of the Consumer Data Industry Association; Rebecca Kuehn, a partner at Hudson Cook; Celia Winslow, president and CEO of the American Financial Services Association; Veneshia Ferdinand, director of compliance policy at Simmons Bank, testifying on behalf of the American Bankers Association; and Chi Chi Wu, director of consumer reporting and data advocacy at the National Consumer Law Center.

Absent from the hearing was French Hill (R-Ark.), chairman of the House Financial Services Committee, who spoke earlier in the week at the Mortgage Bankers Association (MBA)’s National Advocacy Event. Hill did not get into specifics about legislation but instead pushed for advancing smaller, targeted bills with bipartisan support rather than sweeping packages — an approach he argues can help move financial services legislation more effectively through Congress.

Congressman Andy Barr (R-Ky.) opened the hearing by defending the current framework as essential to economic mobility, warning that proposals to exclude certain debts or adopt “positive-only” reporting would erode accuracy.

“A credit reporting system that ignores real obligations is not more fair, it’s simply less accurate,” Barr said. “When accuracy suffers, access to credit suffers with it.”

‘Credit washing’ claims

Barr also pointed to what he described as a surge in duplicative or fraudulent complaints in the CPFB’s database, which are often tied to credit repair firms. He promoted his bill, the Eliminating Fraud in the CFPB Consumer Complaint Database Act (H.R. 7588), which would require consumers to attest to complaints under penalty of perjury and allow institutions to dismiss those deemed illegitimate.

The witnesses echoed concerns about so-called “credit washing,” where mass disputes or false identity theft claims are used to remove accurate negative information. Winslow said bad actors “flood lenders, bureaus and the CFPB complaint database” with form disputes, forcing removals.

“Corrupt that data and the whole system is compromised,” Winslow said, adding that the result is tighter lending standards and higher costs for borrowers.

Ferdinand said lenders rely on complete reports to meet legal obligations. “Removing accurate information … does not eliminate the risk — it just hides it,” she said.

A central point of debate was the FCRA Liability Harmonization Act (H.R. 5775), which would cap damages and limit attorneys fees in credit reporting lawsuits. Supporters, including Smith and Kuehn, said uncapped liability has fueled costly litigation, discouraged data reporting such as rent and utilities, and limited competition.

“The liability risk … is enormous. It’s uncapped and it will put a company out of business overnight,” Smith said.

“The FCRA framework works because it balances consumer protection and access to credit,” Ferdinand said. Kuehn added that large settlements ultimately raise costs for consumers while reducing innovation and credit access.

Democrats and consumer advocates sharply disagreed. Wu said the bills under consideration would “drastically reduce accountability” for errors and make it harder for consumers to seek relief.

“We oppose each of the bills posted today, which all benefit the big three credit bureaus, the most complained-about financial services companies with 5 million complaints to CFPB,” Wu said at the start of her testimony. “Instead of these four giveaway bills, we urge Congress to pass meaningful reform of the credit reporting industry.”

Democrats also criticized changes at the CFPB under Director Russell Vought, arguing the agency has made it harder for consumers to file complaints.

Lawmakers in both parties showed interest in expanding the use of alternative data — such as rent, utility and telecom payments — to help consumers with limited credit histories. Rep. Young Kim (R-Calif.) promoted legislation to incorporate such data, while industry witnesses supported broader reporting but opposed the exclusion of negative information.

Wu warned that including negative rental data could harm vulnerable tenants, arguing any such reporting should be voluntary and limited to positive information.

Members also raised concerns about artificial intelligence, with witnesses noting it could both reduce errors and enable more sophisticated fraud. Smith called AI a “significant risk,” while Winslow said a large share of disputes are already driven by questionable claims.

MBA voices concerns

MBA, in a letter submitted for the record, raised separate concerns about the structure of the credit reporting market. The trade group argued that a lack of competition among the three major credit bureaus — Experian, TransUnion and Equifax — has driven steep cost increases for lenders and borrowers.

MBA said its members have faced credit reporting cost increases of as much as 350% in recent years, along with projected hikes of 40% to 50% in 2026. These costs are passed on to borrowers through higher closing costs. The group attributed the increases in part to the long-standing tri-merge requirement that forces lenders to obtain reports from all three bureaus for mortgages backed by Fannie Mae, Freddie Mac and federal agencies.

“MBA and its members are strong supporters of the welcome focus on pursuing all avenues to improve housing affordability by the Trump administration — and within the individual party caucuses in both the House and Senate,” according to the letter signed by Bill Killmer, the MBA’s senior vice president of legislative and political affairs.

“Given the recent exorbitant price increases cited above, we believe removing the current mortgage tri-merge framework should be a key element on any checklist of affordability initiatives put forth by federal policymakers.”

The group ended its letter by stating that single-file credit reports are already used safely in other consumer lending markets, and that eliminating the tri-merge requirement for most Fannie- and Freddie-backed loans would increase competition, lower closing costs and improve access to homeownership without adding risk.

MBA also pointed to data showing most borrowers have high credit scores, proposing a single-report option for those above 700, while noting that federal housing regulators have previously determined a tri-merge report is not necessary.