New Statistics on the Value
of Uniform National Credit Reporting

As Congress debates the merits of uniform national credit reporting standards (see article in the Legislative Trends section of this issue), a new study from the Information Policy Institute attempts to quantify what some features of the Fair Credit Reporting Act have meant for risk assessment and competition in the U.S. The study poses the following empirical questions:

• How would restrictions on the ability to prescreen offers of credit affect the cost and availability of consumer credit?

• Would certain types of federal or state legislative activity in areas currently preempted by the FCRA diminish the quality and quantity of data available in credit reports? How would this affect the availability and price of credit?

Among the results are the following:

• Prohibiting the use of credit reports for prescreening offers of credit would make the market for credit cards less competitive, raise account acquisition costs, and increase total costs of credit cards to consumers between $269 million and $1.36 billion per year.

• Loss of content in credit reports, relative to information currently available today, would either raise delinquency rates or lower acceptance rates. The researchers examined the impact of various restrictions on credit report content or usage on the performance of six commercial scoring models. In the most extreme scenario of restricted information, in order to hold delinquency rates at today's average levels, approximately 30 percent of those now granted general purpose credit cards would have their applications denied. The researcher estimate this could prevent as many as 41 million people from receiving new credit card accounts.

The complete study is available for download at www.infopolicy.org.