HOUSE BILL REPORT

HB 2353

BYRepresentatives R. Fisher, Silver, H. Sommers, McLean, Anderson, Rector and Jacobsen

Changing requirements for state agency use of credit reporting agencies.

House Committe on State Government

Majority Report:  Do pass.  (7)

      Signed by Representatives Todd, Chair; Anderson, Vice Chair; McLean, Ranking Republican Member; R. Fisher, Hankins, Morris and Silver.

House Staff:Barbara McLain (786-7135)

AS PASSED HOUSE FEBRUARY 9, 1990

BACKGROUND:

Credit reporting agencies (or credit bureaus) collect credit information and sell it to banks, charge card companies, and other creditors in the form of an individual's credit history.  There is no fee to firms providing the credit information.  Credit reporting agencies are regulated by the Fair Credit Reporting Act, administered by the Federal Trade Commission.

In 1989, the Legislature passed a law allowing state agencies to report past due accounts receivable to credit reporting agencies whenever the agency determines that reporting would be cost- effective and would not violate confidentiality.  Federal regulations also require institutions of higher education to provide information to credit reporting agencies on past-due federally insured student loans.

Industry practice with regard to reporting credit information is to report all accounts receivable, not just those that are past due.  In this way, potential creditors have information about an individual's overall level of debt before making a decision to increase that debt with loans or lines of credit.

SUMMARY:

State agencies may report any receivables, rather than only past-due accounts receivable, to credit reporting agencies whenever the agency determines that reporting would be cost-effective and would not violate confidentiality or other legal requirements.

Fiscal Note:      No Impact.

House Committee ‑ Testified For:    Bob Jacobs, Office of Financial Management; and Jerry Sheehan, American Civil Liberties Union (neutral)

House Committee - Testified Against:      No one.

House Committee - Testimony For:    The Office of Financial Management is trying to get the necessary tools in place to improve management of state accounts receivable.  Credit reporting lets the credit community know how much debt burden an individual has and allows the lender to adjust the amount of credit extended so that individuals will not default.  The bill rather indirectly benefits the state; the primary beneficiary appears to be the credit community.

House Committee - Testimony Against:      None.