Law in the news; Credit and the law

The national educational radio network prisons law in the news with Professor William J. Peers of the University of Michigan Law School substituting this week for Joseph R. July. This is Bill Pierce substituting for Dick jewel and I am professor of law and director of the legislative Research Center at the University of Michigan Law School. Senator from a part of Michigan has announced and is conducting hearings with respect to credit ratings one of the most important things that we have in our life is our ability to obtain credit. And this we obtain by going to various types of credit extended extenders and asking them for credit and then extend it to us based upon our record at the present time one of the most difficult aspects of this whole business is the fact that it is being computerized. So at the present time approximately 30 million people are on one computer with respect to their credit rating. This means that a great deal of power is given to a private organization with

respect to whether or not we can borrow money or purchase goods on credit. Credit is important to us because we must utilize credit for emerging emergency purposes in case of illness for example or temporary layoffs from our positions and our we must use credit to spread our obligations over a longer period of time so that it will match our income over the same period. Therefore we must look to credit in our life and unless we have legitimate credit made available to us we are left to the illegitimate sources. The most important of the a legitimate sources of course is that governed by the organized rockets the so-called juice rack and which is making inroads in the credit business throughout the United States. These national systems of credit rating are based upon various types of information that they have concerning our ability to pay for example our age

the income the type of job that we hold whether or not we buy a home or rent a home. What neighborhood we live in and all sorts of other factors. Therefore we must be very alert as to the possibilities that may be involved for people making mistakes. With respect to the kinds of information that are obtained or for overreaching on the part of some creditors in providing credit information to the credit rating establishments This is one of the things that Senator Hart subcommittee of the Senate Judiciary Committee will be looking into. What rights will we have as individuals to ascertain what information is on the computer. How will we be able to correct mistakes when mistakes are made with respect to our own conduct and whether or not we are a legitimate Baauer and should be entitled to borrow moneys at reasonable rates.

The other thing that we should keep in mind of course is that there is risk involved in credit extensions and the credit extended should take some type of risk if no risk is involved why then the cost of credit should be materially reduced. In fact at the present time many credit extended have such good experience that it would be possible for them to double their losses and still obtain a legitimate return on their capital investment. This kind of information therefore affects our very lives and yet we have no control over it at the present time. The Senate Judiciary Committee will be looking into it to ascertain whether or not some type of governmental control should be exercised over the credit rating of business. This information is also important to us with respect to the collection of debts. Overreaching by creditors in the extension of credit and in collecting debts may cause us irreparable

harm and injury. Therefore it is important to us to recognize that when creditors overreach and use unfair tactics in the collection of debts that we do have certain rights that can be exercised with respect to these unconscionable practices. We should all be alerted to the hearings being conducted in Washington. And we're extremely hopeful that beneficial results will be obtained as a result of these hearings. PROFESSOR WILLIAM J peers of the University of Michigan Law School substituting this week for Joseph R. Doolan as presented law in the new as recorded by the University of Michigan broadcasting services. This is the national educational radio network.