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Senate Passes Bill Providing for Free Credit Freezes – Possible Expansion of VantageScore

The Senate has passed a bill that would roll back some banking regulations. Indirectly, the bill addresses Equifax’s historic data breach in which Social Security numbers and other personal data of 150 million people were exposed — a number that comprises well over half the U.S.’s adult population.

Though Sens. Mark Warner (D-Virg.) and Elizabeth Warren (D-Mass.) had put forth a bill in January that would hold credit reporting agencies responsible for breaches, it did not progress and Congress had failed to issue a legislative response to the Equifax breach.

In a move meant to benefit consumers, the new Senate bill, which was introduced by Sen. Mike Crapo (R-Idaho), includes free credit freezes for consumers — stripping the credit bureaus like Equifax, Experian, and TransUnion of a moneymaker. Credit freezes typically cost between $5 and $15 each. In addition, veterans are to be given free credit monitoring.

While the free freezes are good for consumers the Senate bill also stands to give credit reporting companies a break that could be worth far more than the cost of providing these services. The legislation also stipulates that people in the military and veterans (who are being given free monitoring) do not have the ability to sue the agencies.

The bill would essentially open a new line of business for the three major credit reporting agencies, allowing their joint entity VantageScore to issue credit scores for mortgage applicants with Freddie Mac and Fannie Mae. Currently, Fair Isaac’s FICO score is the sole provider of credit scores to determine a mortgage borrower’s creditworthiness. The bill would expand competition for credit scores, but critics decry Equifax’s involvement.

The bill is considered likely to pass the House, and the Trump administration supports the bill as is.

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