Consumer Outreach and Education
The role of credit reports is often misunderstood by consumers; thus, appropriate transparency and outreach should be used to foster consumer education. People seldom think about or review their credit report until they have a problem, so the association they have
with credit reports is often a negative one. Consumers are unlikely to fully appreciate what role credit reports have in facilitating access to credit or how the consumers may contribute to a more competitive credit market. When there is a problem, consumers may not know either the laws and regulations pertaining to this activity or their rights and responsibilities under those statutes. An important role for the regulator is that of providing outreach and education to consumers, both to ensure that consumers are able to exercise their basic rights and to encourage the development of the industry. The regulator can accomplish this function in many ways, including by making available the laws and regulations pertaining to credit reporting in easy-to-understand formats and through multiple media (e. g., Web sites, printed communication, information distributed at banks, etc.) and by sponsoring or encouraging public service ads and announcements related to credit reporting. The regulator can require that notices of an adverse action that was based on a credit report include information about the consumer’s rights under the law. The public outreach function may be particularly important when a credit-reporting system is first established to gain the public’s confidence and to maximize participation in the system. Some recommended elements of this outreach effort include the following.
• Enough information should be made available on managing credit and on the rights and responsibilities of borrowers with respect to credit reporting. For example, materials at the appropriate level and language could be provided through the Internet, banks, retailers, and government offices. Also, media communication such as radio and television public service advertisements could play an important role in dissemination efforts.
• Industry should take an active part in providing consumer assistance.
• It is advisable to strengthen not only outreach to lenders with respect to the importance of credit information but also outreach to other interested parties such as judges and microfinance institutions.