GETTING CREDIT WHERE CREDIT IS DUE - PROPOSED CHANGES IN THE FAIR CREDIT REPORTING ACT

Credit industry and consumer interests are not fully compatible. Credi t industry participants have weak incentives to insure the accuracy of consumer credit reports and guard against improper and unauthorized u se of reports. Thus, consumers may be denied credit based on inaccurat e information and have their privacy invaded due to improper use of cr edit reports. Congress enacted the Fair Credit Reporting Act (FCRA) to balance both consumer and industry interests in the market for consum er credit information. The FCRA provides some consumer protection, but is inadequate. Although the FCRA has remained virtually unchanged sin ce its enactment in 1970, Congress has recently considered amendments to the FCRA that suggest change may be forthcoming. Using an interest- based analysis, the FCRA and the proposed changes are examined, reveal ing that they do not align the relevant parties' interests well. Futur e reform should attempt to impose on the parties who can achieve the o bjectives of the Act at the least cost the obligation to do so. A more effective balance can be achieved by providing consumers with greater power to correct errors in reports, and by shifting same of the burde n for error correction and privacy protection from credit agencies to information suppliers and users.