HUMAN TRAFFICKING CREDIT REPAIR OVERVIEW
What is the Debt Bondage Repair Act?
In December 2021, Congress passed the Debt Bondage Repair Act as part of a larger
package of legislation. This new law was drafted in response to survivors who shared
how their trafficking experiences negatively impacted their credit scores, such as
traffickers opening or controlling bank accounts or lines of credit in their name.
This new law required the Consumer Financial Protection Bureau (CFPB), a U.S.
government agency responsible for overseeing financial products and services for
consumers, to create a process through which survivors of human trafficking can apply
to have adverse credit information resulting from their trafficking experience removed
from their credit reports. In June, the CFPB published details of the new process
through which victims and survivors of human trafficking submit specific information
directly to consumer reporting agencies in order to have information resulting from
their trafficking experience blocked from their consumer reports (including credit
reports). This process launched on July 25, 2022 and is now available to many victims
and survivors in the United States.
What is a consumer reporting agency and what is a credit report?
In the United States, multiple private companies called consumer reporting agencies
(also known as credit reporting companies or credit bureaus) collect and store financial
data about individuals from creditors, such as lenders, credit card companies, and
other companies such as debt collection agencies.
Consumer reporting agencies compile this information about an individual’s financial
and other history, including criminal records, into a credit report or a consumer report.
The information contained in these reports is used for a variety of purposes including
to calculate an individual’s credit scores. Different companies calculate credit scores
using different mathematical formulas so an individual may have multiple different
scores depending on the source. For more information, see this CFPB resource.
Consumer reports and credit scores are then used by other companies to make a
variety of decisions including but not limited to:
●
whether to loan money to an individual;
●
what interest rates should be associated with loans or lines of credit;
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whether to offer an individual insurance, rent a house or apartment to an
individual, or provide an individual with a utility or service; and/or
●
whether to hire a particular job applicant.