Gov. Cuomo to Credit Reporting Agencies: Protect Sandy Victims
New York Gov. Andrew Cuomo is demanding that credit bureaus give special allowances for Hurricane Sandy victims. The credit reporting agencies, however, say they are already doing their part.
ALBANY, N.Y. — New York Governor Andrew Cuomo called on credit reporting agencies last week to not allow credit scores for Hurricane Sandy victims to suffer, but a trade group representing the agencies said it’s up to finance sources to make allowances for consumers affected by last October’s superstorm.
At the direction of the governor, Superintendent of Financial Services Benjamin M. Lawsky sent letters to FICO, Equifax, Experian, TransUnion and the Consumer Data Industry Association (CDIA), requesting that they ensure that credit scores for Hurricane Sandy victims not be ruined by the natural disaster because it was out of their control.
“We request that your organization ensure that no Sandy victim's credit is unfairly damaged due to circumstances beyond their control,” the letter states, in part. “We are also asking that you reset any scores that have already been improperly lowered. We are also going to work with the banks and other financial institutions to ensure they are doing their part to avoid these unfair results.”
Equifax and the CDIA responded, saying that they have no control over what happens to credit scores. They added that any special allowances for disaster victims are in the hands of individual lenders and score developers such as FICO or VantageScore.
However, the CDIA reportedly sent three separate advisories to its group of 8,000 credit card issuers, lenders, members of the American Bankers Association and other entities furnishing data to nationwide credit bureaus — one issued the day after Hurricane Sandy hit, another in January, and the latest one issued last week upon the request from Lawsky.
According to Equifax Spokesperson Tim Klein, the notices focused on two actions, one of which draws on a practice that has been in place since 2005, when credit bureaus reacted to Hurricane Katrina. The bureaus adopted a special disaster code at the time “to specifically deal with natural disasters and their impact on an individual’s credit history so that subsequent recipients of a credit report can take this into account when making a decision about a loan, apartment rental or other transaction.”
The advisories from the CDIA also addressed situations where finance sources place a customer’s loan into forbearance. According to Klein, if the lender reports that to the credit bureau, the loan should remain current so that consumers’ credit scores are not adversely impacted.
“The CDIA’s members were proactive in their outreach to ensure that lenders understood their data reporting options,” Klein stated in the e-mail. “The CDIA is the owner and administrator of the ‘Metro 2’ data reporting system, which is used by all data furnishers to report data to the credit bureaus. This format enables lenders to provide data in a uniform and consistent manner.”
Norm Magnuson, a spokesperson with the CDIA, iterated that the organization does not personally develop consumers’ scores, but it does have access to the financial institutions that make the decisions on consumers’ credit scores. “We’ve engaged with the governor’s office about what we’ve done and what we continue to do,” he said. “We’re going to help in any way we can.”
FICO also agreed to meet with N.Y. state officials. “FICO deeply sympathizes with the victims of Hurricane Sandy. We would be happy to discuss with State Superintendent Lawsky, lenders and consumer reporting agencies how best to address the continuing financial challenges faced by victims of that disaster,” FICO spokesperson Anthony A. Sprauve wrote in an e-mail to F&I and Showroom.
Governor Cuomo’s office did not respond to the status of any resolution. Representatives from Experian and TransUnion were unavailable for comment.
— Stephanie Forshee
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