New Bill Could Allow Alternate Sources in Credit Determination
A bipartisan group of Senators led by Tim Scott (R- SC) and Mark Warner (D- VA) introduced companion legislation to a House bill this week called the Credit Score Competition Act. The bill permits Freddie Mac and Fannie Mae to rely on alternative sources of data, like rent or utility payment history, in compiling credit scores for home loan applications. A previous iteration of the bill failed to pass Congress in 2015.
The Credit Score Competition Act is not the only federal effort to change how credit is calculated. Earlier this year, the Consumer Financial Protection Bureau requested feedback on the potential for alternative credit sources as the agency mulled a rule on the problem. No such rule has been issued by the Bureau at this time, despite the continued problems associated with credit invisibility.