The availability of credit in the United States rests on a vast reporting system that translates consumer behavior into lending decisions, yet lawmakers heard Thursday (April 16) that weaknesses in how data is collected, disputed and applied are constraining access for many households.
At a House Financial Services subcommittee hearing titled “Promoting Access to Credit for Everyday Americans,” expert witnesses described a system that is both foundational and under strain. Across testimony, a common theme emerged: when data flows cleanly, lenders can extend credit more broadly and price it with greater precision, but when that information is distorted or incomplete, access narrows and costs rise.
Limitations of Current Practices
Despite its scale and reach, witnesses pointed to structural weaknesses that complicate how credit data is used. Much of the discussion focused on the dispute process, which is intended to correct errors but is increasingly burdened by volume and misuse.
Celia Winslow, president and CEO of the American Financial Services Association, told lawmakers during testimony that creditors now face “hundreds, thousands, even hundreds of thousands of counterfeit disputes per month,” many of which are duplicative and lack documentation. These filings, she said, can overwhelm systems designed to resolve legitimate consumer complaints, raising compliance costs and delaying resolution for valid disputes.
Banks echoed those concerns, describing the operational strain created by dispute investigations. Veneshia Ferdinand, of the American Bankers Association, noted that even smaller institutions must devote significant resources to investigating disputes within strict timelines, often relying on manual processes that divert attention from other compliance functions.
Consumer advocates pointed to other gaps inherent in the credit arena. Chi Chi Wu, of the National Consumer Law Center, argued that the dispute system often fails consumers, describing it as “an automated travesty” in which investigations can be perfunctory and heavily reliant on furnishers’ responses. In that view, the issue is not excessive complaints but persistent inaccuracies that remain unresolved.
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Alternative Data Offers Promise, Merits Caution
The hearing also explored whether expanding the types of data used in underwriting could improve access, particularly for consumers with limited credit histories. Though there was recognition of is benefits, notes of caution peppered the hearing.
Rebecca Kuehn, partner at Hudson Cook, illustrated utility payments, telecommunications records and cash-flow data as potential supplements to traditional credit files. When used responsibly, she said, those inputs could help more consumers gain entry into mainstream lending.
Dan Smith, CEO of the Consumer Data Industry Association, emphasized that broader participation by data furnishers improves the system’s usefulness, allowing lenders to build a more comprehensive view of borrower behavior.
In his own remarks during the hearing, Rep. Bill Foster, D-Ill., said that “if used correctly,” these alternative datasets, combined with insight into cash flow, “can improve access to credit for millions of credit invisible Americans who struggle to access traditional lending options.” But he cautioned that there are risks including those data sources, in terms of possible discriminatory practices.
Later during the hearing, Rep. Nydia Velazquez, D-NY, said that “I don’t believe that alternative data is a cure-all for credit inequality.”
Consumer advocates warned that expanded reporting carries risks if not paired with strong safeguards. Wu argued that proposals to include rent and utility data could override state privacy protections and expose financially stressed households to additional negative marks, particularly during periods of high costs or income volatility.
“The devil is in the details,” Wu said.
Without dependable credit histories, Winslow said, lending would tilt toward applicants with higher incomes or greater collateral, reducing opportunities for those seeking to build or rebuild credit.
Ferdinand reinforced that view from a banking perspective, noting that incomplete or suppressed information forces lenders to tighten standards, which can exclude otherwise creditworthy consumers. The implication is that both missing data and erroneous data can distort risk calculations in ways that reduce access.
Fraud and System Integrity
Fraud emerged as a central concern, particularly in the context of identity theft and manipulation of the dispute process.
Winslow warned that false identity theft claims and coordinated dispute campaigns can “undermine” the credit reporting system, making it harder for lenders to assess true risk and leading to tighter credit conditions for legitimate borrowers. Wu cited cases where inaccurate data led to denied housing, lost employment opportunities and higher borrowing costs, underscoring the need for effective remediation mechanisms.
Witnesses offered sharply different prescriptions for reform, reflecting the broader tension between improving access and ensuring accountability. Kuehn supported aligning liability standards under the Fair Credit Reporting Act with other consumer laws to encourage faster dispute resolution and reduce litigation incentives that do not directly benefit consumers.
Wu opposed proposals that would limit damages or restrict complaints, contending that such changes would reduce incentives to correct errors and weaken consumer protections.
