Section 1. TitleThis legislation may be cited as the
Bad Credit Relief Act of 2020.
Section 2. Findings(1) Many Atlasians across the country are faced with mounting medical debt, dealing with predatory lenders and fraudulent activity, and prevented from accessing credit due to their credit reports containing older debt, providing little to no insight of credit worthiness.
(2) Consumer reports play an increasingly important role in the lives of Atlasian consumers. Most creditors, for example, review these reports to make decisions about whether to extend credit to consumers and what terms and conditions to offer them. As such, information contained in these reports affects whether a person is able to get a private education loan to pay for college costs, to secure a mortgage loan to buy a home, or to obtain a credit card, as well as the terms and conditions under which consumer credit products or services are offered to them.
(3) Credit reports are also increasingly used for many noncredit decisions, including by landlords to determine whether to rent an apartment to a prospective tenant and by employers to decide whether to hire potential job applicants or to offer a promotion to existing employees.
TITLE I—Restoring the impaired credit of victims of predatory activities and unfair consumer reporting practicesSection 101. Shortening the time period that most adverse credit information stays on consumer reports1.) Section 605 of the
Fair Credit Reporting Act is hereby amended:
(1) in subsection (a)—
(A) by striking “Except as authorized under subsection (b), no” and inserting “No”;
(B) in paragraph (1), by striking “10 years” and inserting “7 years”;
(C) in paragraph (2), by striking “Civil suits, civil judgments, and records” and inserting “Records”;
(D) in paragraph (3), by striking “seven years” and inserting “4 years”;
(E) in paragraph (4), by striking “seven years” and inserting “4 years, except as provided in paragraph [8], (10), (11), (12), or (13), or as required by section 605C, 605D, 605E, or 605F”;
(F) in paragraph (5)—
(i) by striking “, other than records of convictions of crimes”; and
(ii) by striking “seven years” and inserting “4 years, except as required by section 605C, 605D, 605E, or 605F”; and
(G) by adding at the end the following new paragraphs:
“(9) Civil suits and civil judgments (except as provided in paragraph [8]) that, from date of entry, antedate the report by more than 4 years or until the governing statute of limitations has expired, whichever is the longer period.
“(10) A civil suit or civil judgment—
“(A) brought by a private education loan holder that, from the date of successful completion of credit restoration or rehabilitation in accordance with the requirements of section 605D or 605E, antedates the report by 45 calendar days; or
“(B) brought by a lender with respect to a covered residential mortgage loan that antedates the report by 45 calendar days.
“(11) Records of convictions of crimes which antedate the report by more than 7 years.
“(12) Any other adverse item of information relating to the collection of debt that did not arise from a contract or an agreement to pay by a consumer, including fines, tickets, and other assessments, as determined by the Bureau, excluding tax liability.”;
(2) by striking subsection (b) and redesignating subsections (c) through (h) as subsections (b) through (g), respectively; and
(3) in subsection (b) (as so redesignated), by striking “7-year period referred to in paragraphs (4) and (6)” and inserting “4-year period referred to in paragraphs (4) and (5)”.
(b) Conforming amendments.—The Fair Credit Reporting Act is amended—
(1) in section 616(d), by striking “section 605(g)” each place that term appears and inserting “section 605(f)”; and
(2) in section 625(b)(5)(A), by striking “section 605(g)” and inserting “section 605(f)”.
Section 102. Mandating the expedited removal of fully paid or settled debt from consumer reportsSection 605(a) of the Fair Credit Reporting Act , as amended by section 101(a)(1), is further amended by adding at the end the following new paragraph:
“(13) Any other adverse item of information related to a fully paid or settled debt that had been characterized as delinquent, charged off, or in collection which, from the date of payment or settlement, antedates the report by more than 45 calendar days.”.
Section 103. Imposing restrictions on the appearance of medical collections on consumer reports and requires the expedited removal of fully paid or settled medical collections from consumer reports(a) Removal of fully paid or settled medical debt from consumer reports.—Section 605(a) of the Fair Credit Reporting Act, as amended by section 102, is further amended by adding at the end the following new paragraph:
“(14) Any other adverse item of information related to a fully paid or settled debt arising from the receipt of medical services, products, or devices that had been characterized as delinquent, charged off, or in collection which, from the date of payment or settlement, antedates the report by more than 45 calendar days.”.(b) Establishing an extended time period before certain medical debt information may be reported.—Section 605(a) of such Act is further amended by adding at the end the following new paragraph:
“(15) Any information related to a debt arising from the receipt of medical services, products, or devices, if the date on which such debt was placed for collection, charged to profit or loss, or subjected to any similar action antedates the report by less than 365 calendar days.”.
(c) Prohibition on reporting medically necessary procedures.—Section 605(a) of such Act is further amended by adding at the end the following new paragraph:
“(16) Any information related to a debt arising from a medically necessary procedure.”.
(d) Technical amendment.—Section 604(g)(1)(C) of the Fair Credit Reporting Act is further amended by striking “devises” and inserting “devices”.
Section 104. Providing credit restoration for victims of predatory mortgage lending and servicing(a) In general.—The Fair Credit Reporting Act is amended by inserting after section 605B the following new section:
Section 105. Credit restoration for victims of predatory mortgage lending“(a) In general.—A consumer reporting agency may not furnish any consumer report containing any adverse item of information relating to a covered residential mortgage loan (including the origination and servicing of such a loan, any loss mitigation activities related to such a loan, and any foreclosure, deed in lieu of foreclosure, or short sale related to such a loan), if the action or inaction to which the item of information relates—
“(1) resulted from an unfair, deceptive, or abusive act or practice, or a fraudulent, discriminatory, or illegal activity of a financial institution, as determined by the Bureau or a court of competent jurisdiction; or
“(2) is related to an unfair, deceptive, or abusive act, practice, or a fraudulent, discriminatory, or illegal activity of a financial institution that is the subject of a settlement agreement initiated on behalf of a consumer or consumers and that is between the financial institution and an agency or department of a local, State, or Federal Government, regardless of whether such settlement includes an admission of wrongdoing.
“(b) Covered residential mortgage loan defined.—In this section, the term ‘covered residential mortgage loan’ means any loan primarily for personal, family, or household use that is secured by a mortgage, deed of trust, or other equivalent consensual security interest on a dwelling (as defined in section 103(w) of the Truth in Lending Act), including a loan in which the proceeds will be used for—
“(1) a manufactured home (as defined in section 603 of the Housing and Community Development Act of 1974;
“(2) any installment sales contract, land contract, or contract for deed on a residential property; or
“(3) a reverse mortgage transaction (as defined in section 103 of the Truth in Lending Act).”.
(b) Table of contents amendment.—The table of contents of the Fair Credit Reporting Act is amended by inserting after the item relating to section 605B the following new item:
Section 106. Credit restoration for victims of predatory mortgage lending“(a) In general.—A consumer reporting agency may not furnish any consumer report containing any adverse item of information relating to a covered residential mortgage loan (including the origination and servicing of such a loan, any loss mitigation activities related to such a loan, and any foreclosure, deed in lieu of foreclosure, or short sale related to such a loan), if the action or inaction to which the item of information relates—
“(1) resulted from an unfair, deceptive, or abusive act or practice, or a fraudulent, discriminatory, or illegal activity of a financial institution, as determined by the Bureau or a court of competent jurisdiction; or
“(2) is related to an unfair, deceptive, or abusive act, practice, or a fraudulent, discriminatory, or illegal activity of a financial institution that is the subject of a settlement agreement initiated on behalf of a consumer or consumers and that is between the financial institution and an agency or department of a local, State, or Federal Government, regardless of whether such settlement includes an admission of wrongdoing.
“(b) Covered residential mortgage loan defined.—In this section, the term ‘covered residential mortgage loan’ means any loan primarily for personal, family, or household use that is secured by a mortgage, deed of trust, or other equivalent consensual security interest on a dwelling (as defined in section 103(w) of the Truth in Lending Act), including a loan in which the proceeds will be used for—
“(1) a manufactured home (as defined in section 603 of the Housing and Community Development Act of 1974;
“(2) any installment sales contract, land contract, or contract for deed on a residential property; or
“(3) a reverse mortgage transaction (as defined in section 103 of the Truth in Lending Act).”.
(b) Table of contents amendment.—The table of contents of the Fair Credit Reporting Act is amended by inserting after the item relating to section 605B the following new item:
“605C. Credit restoration for victims of predatory mortgage lending.”.
(c) Effective date.—The amendments made by this section shall take effect at the end of the 18-month period beginning on the date of the enactment of this Act.
Section 107. Providing credit relief for private education loans borrowers who were defrauded or mislead by proprietary education institution or career education programs(a) In general.—The Fair Credit Reporting Act, as amended by section 104, is further amended by inserting after section 605C the following new section:
Ҥ 605D. Private education loan credit restoration for defrauded student borrowers who attend certain proprietary educational institution or career education programs
“(a) Process for certification as a qualifying private education loan borrower.—
“(1) IN GENERAL.—A consumer may submit a request to the Bureau, along with a defraudment claim, to be certified as a qualifying private education loan borrower with respect to a private education loan.
“(2) CERTIFICATION.—The Bureau shall certify a consumer described in paragraph (1) as a qualifying private education loan borrower with respect to a private education loan if the Bureau or a court of competent jurisdiction determines that the consumer has a valid defraudment claim with respect to such loan.
“(b) Removal of adverse information.—Upon receipt of a notice described in subsection (d)(5), a consumer reporting agency shall remove any adverse information relating to any private education loan with respect to which a consumer is a qualifying private education loan borrower from any consumer report within 45 calendar days of receipt of such notification.
“(c) Disclosure.—The Bureau shall disclose the results of a certification determination in writing to the consumer that provides a clear and concise explanation of the basis for the determination of whether such consumer is a qualifying private education loan borrower with respect to a private education loan and, as applicable, an explanation of the consumer’s right to have adverse information relating to such loan removed from their consumer report by a consumer reporting agency.
“(d) Procedures.—The Bureau shall—
“(1) establish procedures for a consumer to submit a request described in subsection (a);
“(2) establish procedures to efficiently review, accept, and process such a request;
“(3) develop ongoing outreach initiatives and education programs to inform consumers of the circumstances under which such consumer may be eligible to be certified as a qualifying private education loan borrower with respect to a private education loan;
“(4) establish procedures, including the manner, form, and content of the notice informing a private educational loan holder of the prohibition on reporting any adverse information relating to a private education loan with respect to which a consumer is a qualifying private education loan borrower; and
“(5) establish procedures, including the manner, form, and content of the notice informing a consumer reporting agency of the obligation to remove any adverse information as described in subsection (c).
“(e) Standardized reporting codes.—A consumer reporting agency shall develop standardized reporting codes for use by private education loan holders to identify and report a qualifying private education loan borrower’s status of a request to remove any adverse information relating to any private education loan with respect to which such consumer is a qualifying private education loan borrower. A consumer report in which a person furnishes such codes shall be deemed to comply with the requirements for accuracy and completeness required under sections 623(a)(1) and 630. Such codes shall not appear on any report provided to a third party, and shall be removed from the consumer’s credit report upon the successful restoration of the consumer’s credit under this section.
“(f) Defraudment claim defined.—For purposes of this section, the term ‘defraudment claim’ means a claim made with respect to a consumer who is a borrower of a private education loan with respect to a proprietary educational institution or career education program in which the consumer alleges that—
“(1) the proprietary educational institution or career education program—
“(A) engaged in an unfair, deceptive, or abusive act or practice, or a fraudulent, discriminatory, or illegal activity—
“(i) as defined by Regional or State law of the Region or State in which the proprietary educational institution or career education program is headquartered or maintains or maintained significant operations; or
“(ii) under Federal law;
“(B) is the subject of an enforcement order, a settlement agreement, a memorandum of understanding, a suspension of tuition assistance, or any other action relating to an unfair, deceptive, or abusive act or practice that is between the proprietary educational institution or career education program and an agency or department of a local, Regional, State, or Federal Government; or
“(C) misrepresented facts to students or accrediting agencies or associations about graduation or gainful employment rates in recognized occupations or failed to provide the coursework necessary for students to successfully obtain a professional certification or degree from the proprietary educational institution or career education program; or
“(2) the consumer has submitted a valid defense to repayment claim with respect to such loan, as determined by the Secretary of Education.”.
(b) Table of contents amendment.—The table of contents of the Fair Credit Reporting Act is amended by inserting after the item relating to section 605C (as added by section 104) the following new item:
“605D. Private education loan credit restoration for defrauded student borrowers who attend certain proprietary educational institution or career education programs.”.
Section 108. Establishing the right for victims of financial abuse to have adverse information associated with an abuser’s fraudulent activity removed from their consumer reports(a) In general.—The Fair Credit Reporting Act, as amended by section 105, is further amended by inserting after section 605D the following new section:
Ҥ 605E. Financial abuse prevention
“For a consumer who is the victim of intentionally abusive or harmful financial behavior, as determined by a court of competent jurisdiction including a family court, juvenile court, or other court with personal jurisdiction, that was conducted by a spouse, family or household member, caregiver, or person with whom such consumer had a dating relationship in a manner which resulted in the inclusion of an adverse item of information on the consumer report of the consumer, and the consumer did not participate in or consent to such behavior, the consumer may apply to a court of competent jurisdiction, including a family court, juvenile court, or other court with personal jurisdiction, for an order to require the removal of such adverse information from the consumer’s file maintained by any consumer reporting agency.”.
(b) Table of contents amendment.—The table of contents of the Fair Credit Reporting Act is amended by inserting after the item relating to section 605D the following new item:
“605E. Financial abuse prevention.”.
Section 109. Prohibiting treatment of credit restoration or rehabilitation as adverse informationThe Fair Credit Reporting Act is amended—
(1) by adding at the end the following new section:
Ҥ 630. Prohibition of certain factors related to Federal credit restoration or rehabilitation
“(a) Restriction on credit scoring models.—A credit scoring model may not—
“(1) take into consideration, in a manner adverse to a consumer’s credit score or educational credit score, any information in a consumer report concerning the consumer’s participation in credit restoration or rehabilitation under section 605C, 605D, or 605E; or
“(2) treat negatively, in a manner adverse to a consumer’s credit score or educational credit score, the absence of payment history data for an existing account, whether the account is open or closed, where the absence of such information is the result of a consumer’s participation in credit restoration or rehabilitation under section 605C, 605D, or 605E.
“(b) Restriction on persons obtaining consumer reports.—A person who obtains a consumer report may not—
“(1) take into consideration, in a manner adverse to a consumer, any information in a consumer report concerning the consumer’s participation in credit restoration or rehabilitation under section 605C, 605D, or 605E; or
“(2) treat negatively the absence of payment history data for an existing account, whether the account is open or closed, where the absence of such information is the result of a consumer’s participation in credit restoration or rehabilitation under section 605C, 605D, or 605E.
“(c) Accuracy and completeness.—If a person who furnishes information to a consumer reporting agency requests the removal of information from a consumer report or a consumer reporting agency removes information from a consumer report in compliance with the requirements under section 605C, 605D, or 605E, or such information was removed pursuant at section 605(a)(11), such report shall be deemed to satisfy the requirements for accuracy and completeness with respect to such information.
“(d) Prohibition related to adverse actions and risk-Based pricing decisions.—No person shall use information related to a consumer’s participation in credit restoration or rehabilitation under section 605C, 605D, or 605E in connection with any determination of—
“(1) the consumer’s eligibility or continued eligibility for an extension of credit;
“(2) the terms and conditions offered to a consumer regarding an extension of credit; or
“(3) an adverse action made for employment purposes.”; and
(2) in the table of contents for such Act, by adding at the end the following new item:
“630. Prohibition of certain factors related to Federal credit restoration or rehabilitation.”.