House Bill Would Expand Use of Alternative Credit Data

In a HousingWire article published June 18, reporter Sarah Wolak covered new legislation from Rep. Nikema Williams that would ask mortgage lenders to look beyond a traditional credit score when a borrower requests it. You can read the full story here, though HousingWire requires a subscription.

"I've been unbanked. I know what it's like to work hard, pay your bills and do everything right, only to have the financial system tell you that you don't qualify."

• The bill, the Expanding Access to Credit through Consumer-Permissioned Data Act, would amend the Equal Credit Opportunity Act.
• At an applicant's request, lenders would consider consumer-authorized records like rent payments, bank-statement data, and other history not always found in a traditional credit report.
• The bill cites roughly 32 million Americans who have little or no credit history with the major credit reporting agencies.
• If it becomes law, the CFPB would have 18 months to write the rules before the requirements take effect.

At Informative Research, we already help lenders bring in consumer-permissioned data through tools like AccountChek, so folding a borrower's own financial records into a decision is familiar ground. This is still a proposal, not a rule, so nothing changes for lenders today. It is one to watch, because it points to where the conversation about expanding credit access keeps heading.

For IR clients, the practical point is that consumer-permissioned data keeps gaining attention in Washington, so it helps to know how your workflow would handle a borrower who asks to use it.

Tags: credit access, alternative data, consumer-permissioned data, mortgage regulation, ECOA

Disclaimer: The views and commentary expressed in this blog are provided for informational purposes only and do not constitute legal, financial, or professional advice. Informative Research (IR) makes every effort to ensure the accuracy of the content at the time of publication, but we do not guarantee its completeness or timeliness. Readers should consult their own legal or business advisors before making decisions based on this information. References to third-party companies, products, or services are not endorsements.