HFSC Seeks Information on Role of Alternative Data in Expanding Credit Access
Last week, the House Financial Services Committee (HFSC) sent a letter to the Government Accountability Office requesting information about the benefits and disadvantages of using alternative data in mortgage lending and credit reporting agencies.
The lawmakers signing the letter included Congresswoman Maxine Waters (D-Calif.), who chairs the Committee, as well as Reps. Al Green (D-Texas), Bill Foster (D-Ill.), Stephen Lynch (D-Mass.), and Josh Gottheimer (D-N.J.).
In the letter, the lawmakers advocated for the use of alternative data in identifying creditworthy borrowers. They wrote that “while nearly all millennials have a cell phone, only one-third of people between the ages of 18 and 29 have a credit card. By incorporating telecommunications payment history data, CRAs may be able to score previously unscorable millennials and other consumers who lack a typical credit history.”
This is not the first of the Committee’s efforts to tackle the credit reporting system during this Congress. Last February, the Committee summoned a hearing in February titled, “Who’s Keeping Score? Holding Credit Bureaus Accountable and Repairing a Broken System.”
They have also passed several pieces of legislation dealing with credit scores, such as the Free Credit Scores for Consumers Act of 2019 (H.R. 3618) and the Improving Credit Reporting for All Consumers Act (H.R. 3642).
The Committee concluded the letter by providing questions for the Government Accountability Office “to explore the use of alternative data in expanding access to credit, with a particular focus on mortgage credit.”