Biden Proposes Public Credit Reporting Agency in Policy Plan

In a recent plan outlining the presumptive Democratic presidential nominee’s housing policies, Joe Biden has proposed creating a public credit reporting agency within the Consumer Financial Protection Bureau, which would compete with the three existing credit scoring companies. The Public Credit Reporting Agency would “provide consumers with a government option that seeks to minimize racial disparities, for example by ensuring the algorithms used for credit scoring don’t have a discriminatory impact, and by accepting non-traditional sources of data like rental history and utility bills to establish credit,” the proposal reads.

According to an analysis of the proposal and industry responses by American Banker, federally backed lenders would be obligated to use the agency’s reports to assess credit applicants. Private credit bureaus would also be required to provide data to the proposed agency.

While consumer advocates support the proposal, the financial services and credit reporting industries are concerned about the possibility of government overreach and bias that could hinder credit reports.

“Banks and others would no longer be in charge of their own underwriting systems. The government would be, and that’s troubling to us,” said Francis Creighton, president of the Consumer Data Industry Association.

Additionally, the credit reporting industry has contended that its reports give banks the best idea of consumer creditworthiness in the loan underwriting process. Creighton stated that a public credit reporting agency could actually limit the information banks have because they “would have to use the federal system.”

Though the rest of the agency’s details remain unclear, the idea of a public credit reporting agency will likely pick up steam only if Democrats take control of the White House and the Senate after the election.