Cuomo Prohibits Reporting Agencies, Lenders From Using A Consumer’s Social Network
Gov. Andrew M. Cuomo has signed legislation (S.2302/A.5294) prohibiting consumer reporting agencies and lenders from using the credit scores of people in a consumer’s social network to determine that individual’s credit worthiness.
“Basing someone’s credit score on who they know is not only an invasion of privacy, it is a way for these agencies to unfairly target and penalize low-income New Yorkers,” Cuomo said. “This law will keep these unscrupulous agencies in check, end this unfair practice once and for all and help ensure New Yorkers receive more fair and accurate credit ratings.”
The legislation passed the state Assembly 138-3 with both Assemblymen Andrew Goodell, R-Jamestown, and Joe Giglio, R-Gowanda, voting in favor.
The US General Accounting Office has estimated that some 75 percent of credit scores are wrong based on incorrect information collected by credit bureaus and attached to individual credit scores. These errors and the fuzzy math used to create the credit score can impact the everyday lives of consumers when applying for jobs and schools or when finding housing.
The FICO score, a measure of consumer credit risk that has become a fixture of consumer lending in the United States, is now moving to add a consumer’s social network as another variable in the more than 100 variable equation used to compute a consumer’s credit score. This new law will prevent credit agencies from using this data to determine an individual’s credit score, further protecting consumer right to privacy and preventing these agencies from assigning low-income consumers to lower credit scores based solely on their geography.
This law goes into effect immediately.