Letter to the Hon. Brian Cassin, CEO of Experian - Raskin Calls on Experian to Protect Credit Scores By Correcting Duplicative EIDL Applications

Letter

Dear Mr. Cassin:

Over 44 million Americans have filed for unemployment and more than 100,000 small businesses have permanently shuttered their doors as the coronavirus ripples across the country. Federal small business programs, like Economic Injury Disaster Loans (EIDL), are lifelines for businesses at a time when options are limited and staying afloat is a daily challenge. While these programs provide crucial support, at least one adverse effect has emerged in the form of unnecessary hits to an applicant's credit score.

We've heard from many business owners who report a drop in their credit scores after applying for an EIDL loan. As you know, anytime an individual applies for a loan it results in a "hard pull" on the
applicant's credit report, and usually drops their credit score by several points. Following a lack of
communication by the Small Business Administration (SBA), many individuals submitted their EIDL
application multiples times out of concern that their application did not go through. Furthermore, the
creation of a new streamlined portal at the end of March required many to apply again and applicants that applied before the portal was established received two hard pulls -- one for the EIDL loan and another for the EIDL advance. Many business owners accidentally applied multiple times, inadvertently aggregating hard pulls on their credit report in the process.

The importance of strong credit for long-term recovery cannot be overstated. Credit scores affect an
individual's ability to get a job, rent an apartment, own a home, and secure certain types of insurance. Households with flawed credit will have no choice but to accept higher interest rate loans that can saddle them with debt for years. Poor credit was part of the reason it took individuals so long to recover from the 2008 financial crisis. Before the coronavirus, consumer debt, not counting mortgages, had already reached a staggering $4 trillion. Now millions have lost their jobs and 82 percent of Americans indicate they're worried about making ends meet. Given the extraordinary circumstances facing American workers and businesses, every effort should be made at this time to alleviate undue financial burden.

In response, credit reporting agencies have offered consumers some assistance. For example, your
customers can now access weekly credit reports for free. Unfortunately, this is mostly helpful in
detecting fraud, and it doesn't address concerns about how credit is reported. Similarly, creditors have stated that they will use a natural disaster code for missed or late payments, but again, this does not prevent the reporting of negative information or its impact on credit.

To provide small business owners meaningful assistance, we request for Experian to ensure that
duplicative inquiries for an individual's EIDL loan application be treated as a single inquiry and that any hard pull related to an EIDL advance payment, which is really a grant, have no impact on the applicant's credit score. In addition to ensuring that these changes are made for EIDL applications moving forward, we request that you adjust credit scores retroactively for previous EIDL applications for grants and loans. We thank you for taking the time to consider these simple yet important changes that could help thousands of Americans in protecting their credit in a time of severe financial insecurity.