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FACT SHEET: CREDIT REPORTING MARKET

Credit reporting has a widespread influence on many aspects of a consumer’s financial life. The

Consumer Financial Protection Bureau (CFPB) wants to make sure companies are following federal

consumer financial protection laws. On July 16, 2012, the CFPB adopted a rule to establish the first

federal program to supervise consumer reporting agencies, which include the three big national credit

reporting companies as well as other companies involved in credit reporting.

CFPB’s Supervision

 CFPB’s supervision authority will cover a large part of the consumer reporting market. Under the

rule, the CFPB will have authority to supervise consumer reporting agencies with more than $7

million in annual receipts from consumer reporting activities. CFPB’s supervision authority will cover

approximately 30 firms, or 7 percent of market participants, and account for approximately 94

percent of industry receipts.

 For the first time, consumer reporting agencies will be subject to a federal supervision program.

The CFPB will assess compliance with federal consumer financial laws as well as detect and assess

additional risks to consumers. Supervision may include requiring reports, conducting examinations,

and ongoing monitoring. Supervision will begin after the rule takes effect on Sept. 30, 2012.

 Supervision will complement CFPB’s other tools in the credit reporting market. The CFPB has other

tools it can use to help consumers in this market. It can also write rules under the Dodd‐Frank Act

and the Fair Credit Reporting Act. If need be, the CFPB can take enforcement actions. And, the CFPB

can – and will – educate consumers about credit reporting and their rights under the law. Today, the

CFPB is releasing a Consumer Advisory about credit reports, and it is releasing a series of questions

and answers about credit reporting in its Ask CFPB database.   

 This rule is the first in a series of rulemakings to define “larger participants” in certain nonbank

markets. In February 2012, the CFPB proposed supervising the “larger participants” in the consumer

reporting and debt collection markets. This final rule defines larger participants in the consumer

reporting market. The CFPB plans to finalize a debt collection rule this fall, and plans to propose

additional “larger participant” rules for other nonbank markets in the future.

Consumer Reporting Agencies

 Affect nearly every American consumer. The three largest consumer reporting agencies each

maintain files on more than 200 million Americans. Consumer reports, and the credit scores derived

from them, are used to determine eligibility and pricing for credit cards, home mortgage loans,

automobile loans, and other types of consumer financial products. For example, of the 113 million

credit card and retail card accounts, auto loans, personal loans, mortgages, and home equity loans

originated in the U.S. in 2011, the vast majority were approved and priced using information

provided by consumer reporting agencies.
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 A $4 billion dollar market. According to available data sources, there are about 400 consumer

reporting firms in the United States. Combined, they have more than $4 billion in annual receipts. In

addition to the largest credit reporting companies, there are a variety of specialty consumer

reporting agencies, which may report information on alternative financial products and services, like

checking accounts or payday loans.

 Billions of reports. The Consumer Data Industry Association estimates that every year 3 billion

consumer reports are issued and 36 billion updates are made to consumer files. The largest

consumer reporting agencies collect a variety of information from a range of sources including

lenders, debt collectors, and public records. These companies then sell comprehensive reports

based on the information they collect.  

 The largest financial institutions play a big role. The 10 largest financial institutions provide more

than half of the information about credit accounts contained in consumers’ credit files. They are also

the largest users of credit reports.

 Free annual credit report. In 2003, Congress amended the Fair Credit Reporting Act to require

nationwide consumer reporting agencies to provide consumers, on request, with copies of their

credit reports for free once a year. The three nationwide credit reporting companies developed a

shared website, www.annualcreditreport.com, where consumers can obtain their free annual

reports from each of the companies. Consumers can also obtain their free annual reports by calling

1‐877‐322‐8228.