Nearly 50 Million Americans are ‘Credit Invisible’ Due to Limited Credit History; S. 2355/H.R. 4172 Allows Consumers to Build Credit Scores from Rent, Phone and Gas Payments
WASHINGTON –(ENEWSPF)–December 8, 2015. U.S. Senators Mark Kirk (R-Ill.) and Joe Manchin (D-W.V.) today announced the introduction of The Credit Access and Inclusion Act (S. 2355), which helps consumers without traditional credit histories access credit by allowing non-financial service providers, like gas, electric and telecommunication companies, to report their customers’ on-time payments to credit reporting agencies. According to the Consumer Financial Protection Bureau, nearly 50 million Americans are “credit invisible” – which means their credit history is limited or nonexistent, often because they have never had a credit card or made a mortgage payment. Those without credit reports face barriers when buying a home, securing loans or attempting to establish a secure financial history.
“1.4 million men and women in Illinois are unable to build a credit score, making it very difficult to get a loan, mortgage or credit cards,” Senator Kirk said. “My bipartisan bill with Senator Manchin levels the playing field for those who want to build a credit score.”
“All West Virginians and Americans deserve a chance to gain access to credit if they pay their bills on time every month,” Senator Manchin said. “It’s just common sense to give everyone a fair shot and earn access to credit if they have proven their ability to be responsible. It’s a real shame that the current system keeps some of the most vulnerable citizens in the shadows, and I am proud to work with my friend, Senator Mark Kirk, to fix this issue.”
S. 2355 amends the Federal Fair Credit Reporting Act to allow providers like gas, electric and telecommunication companies to report payment history to bureaus like Equifax, Experian and TransUnion. As a result, low and moderate income individuals would be able to access affordable and responsible financial products and services to build wealth.
“I would like to congratulate Sen. Kirk for taking the lead in the Senate to help up to 50 millions Americans build or rebuild their credit histories so they can obtain credit scores without having to get additional credit cards or high cost loans. The Credit Access and Inclusion Act clears the way for utility, telecom companies and rental histories to be reported for on-time payments to the national credit reporting agencies. Every day NCRA members see the positive changes that the addition of just one or two accounts can make to a consumers credit score. With the introduction of this bill, Sen Kirk is helping Americans obtain that extra account to improve their credit history based on payments they have making every month,” said Terry Clemens, Executive Director of the National Consumer Reporting Association, a trade association based in Chicago, providing credit information to credit grantors, such as employers, businesses, mortgage lenders, etc.
“More than 40 million ‘credit invisibles’ in the US have trouble accessing affordable, mainstream credit. Congress can help these consumers by passing legislation to clarify that on-time payments to telecommunications, utility and rental companies may be reported to the nationwide credit bureaus,” said Craig Boundy, CEO of Experian North America, the nation’s largest credit bureau. “Consumers are currently penalized when these accounts are late, but don’t receive credit for paying them on time. S. 2355 would help correct this unfairness.”
“For many Americans, their record of paying utility bills, phone bills and rent is a significant part of their credit history. We believe their credit files and scores should reflect the credit they are due,” said Chris Cartwright, president of TransUnion’s USIS business unit. “Including this alternative data allows the credit industry to offer credit to a broader and more diverse set of consumers who traditionally may have been overlooked by the conventional risk assessment tools.”
“Senator Kirk’s leadership on this issue demonstrates his commitment to a fair and responsible lending system to all Americans. Based on our analysis, including fully reported non-financal payment data in consumer credit reports would help more than 1 million people in Illinois, and nearly 54 million people nationally access affordable sources of credit needed to buy a home or start a small business,” said Dr. Michael Turner, President and CEO of PERC, a non-profit think tank focused on innovative market solutions to improve economic development and help the underserved.