In a society that runs on credit, Americans are consumed with having a perfect credit score. Without good credit, consumers aren’t eligible for favorable interest rates, low interest credit cards, mortgages, insurance and even employment. In an effort to help the vast majority of American consumers obtain credit, Congress has introduced The Credit Access and Inclusion Act of 2019. The proposed Act would allow what has been referred to as “credit invisibles”, which is some 25 million Americans who have never had a credit card or even taken out a loan, to be looked at as credit worthy by reviewing alternative data.
Financial experts feel that credit invisibles may not actually have poor credit, but because they have no credit history and no relationship with a financial institution, lenders don’t want to be the first to take a risk and extend these individuals credit. Without a credit history or something for a lender to review to make an informed decision about what kind of borrower the consumer may be, lenders have no way to determine whether or not the borrower is reliable. In an effort to help this large number of consumers, the Act would allow previously protected consumer information, such as utility bills and rental payment history to become a part of a consumer’s credit history. Many states require a consumer to give consent for this information to be released from these companies. However, if the act was passed no consent would be needed. The information would be a part of a consumer’s credit file for lenders to review allowing credit invisibles to become visible to prospective lenders.
On the contrary, opponents of the Act argue that including utility information on a consumer credit report could drastically impact low income consumers who cannot afford to pay their bills. This population of consumers would go from having no credit to having poor credit, which could ruin any chance of approval.
If you are in need of financial assistance or advice in relation to your credit report, contact SmithMarco, P.C. for a completely free case review.