Federal: AFC letter to Committee on Banking, Housing, and Urban Affairs in Support for the Credit Access and Inclusion Act

The Honorable Tim Scott
Chairman
Committee on Banking, Housing, and Urban Affairs
United States Senate
Washington, DC 20510

The Honorable Elizabeth Warren
Ranking Member
Committee on Banking, Housing, and Urban Affairs
United States Senate
Washington, DC 20510

Re: AFC Letter in Support for the Credit Access and Inclusion Act

Dear Chairman Scott, Ranking Member Warren, and Members of the Committee:

We write to express our strong support for the Credit Access and Inclusion Act (the Act), and thank Chairman Scott and his co-sponsors for their leadership in expanding credit access for millions of Americans.

AFC’s mission is to promote an innovative, transparent, inclusive, and customer-centric financial system by supporting the responsible growth of lending, fostering innovation in financial technology (Fintech), and encouraging sound public policy. AFC members are at the forefront of fostering competition in consumer finance and pioneering ways to better serve underserved consumer segments and geographies. AFC has publicly supported 36 percent rate caps at state and federal levels, which is a key component of our advocacy and of addressing responsible lending. Our members are also lowering the cost of financial transactions, allowing them to help meet demand for high-quality, affordable products.

The most recently reported figures state that 26 million Americans are considered "credit invisible," meaning they lack credit records or history of traditional payments, such as student loans, car loans, or mortgage payments.  An additional 19 million Americans had credit scores that were treated as “unscoreable” . This presents a substantial consumer harm, as having no credit or thin credit limits economic mobility difficult and hampers an individual's ability to purchase a car, buy a home, finance their education, and additional opportunities.

AFC has long advocated for pragmatic policy solutions that will encourage innovation and expand access to responsible credit to consumers. Specifically, we have advocated for the increased collection and use of rental and utility payment data in credit reporting and scoring systems. In this effort, AFC is not alone. Government agencies, think tanks, and industry leaders have all recognized the consumer benefits of expanding the collection and use of rental and utility payment data in remedying the “credit invisible” and “unscoreable” issues discussed by the CFPB.  Colloquially considered “alternative data”, rental and utility payment data has shown a significant capacity for reflecting the full financial life of consumers. In turn, providing this fuller consumer picture has helped improve the efficacy of the credit scoring system and expanded access to much needed credit for consumers, particularly those with limited or damaged credit who have been historically excluded from the financial services industry.

The commonsense, innovation-minded provisions put forward in the Credit Access and Inclusion Act would responsibly expand credit access for millions of Americans with limited or non-existent credit histories. The Fair Credit Reporting Act (FCRA) represents one of the core laws governing the financial services industry. Consumer data has become critically important to many financial products and services, ranging from lending and payments processes to marketing and advertising. When conducted responsibly, the use of consumer data to offer these financial products and services can provide significant benefits to consumers.

Specifically, the Act addresses this challenge by enabling the inclusion of non-traditional payment data—such as rent, internet, phone, electricity, and utility payments—into credit reporting. This approach would expand credit histories and generate credit scores for consumers who were previously "unscoreable," thereby opening doors to financial opportunities that were previously out of reach for millions. In practice, amending the FCRA as the Act does and allowing property owners and utility and telecom providers to report payments data to credit reporting agencies will help consumers with an established track record of paying their bills on time develop a positive credit history.

AFC and our members are committed to promoting access to affordable and sustainable financial services. We believe that incorporating alternative data into credit reporting aligns with our mission to promote a transparent, inclusive, and customer-centric financial system. This legislation represents a significant step toward a more equitable credit system that recognizes the financial responsibility of all Americans.

We commend Chairman Scott and the co-sponsors of the Credit Access and Inclusion Act for their leadership on this important issue. We look forward to working with the Committee to support its passage.

Thank you for your leadership and commitment to bettering Americans’ financial futures.

Sincerely,

Ian P. Moloney
SVP, Head of Policy and Regulatory Affairs
American Fintech Council

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[1] See Consumer Financial Protection Bureau, “Data Point: Credit Invisibles” (May 2015) available at https://files.consumerfinance.gov/f/201505_cfpb_data-point-credit-invisibles.pdf

[2] Ibid.

[3] U.S. Government AccountabilityOffice, Financial Technology: Agencies Should Provide Clarification onLenders' Use of Alternative Data, GAO-19-111, (Dec. 19, 2018), availableat https://www.gao.gov/products/gao-19-111; U.S. GovernmentAccountability Office, Mortgage Lending:

Use of AlternativeData Is Limited but Has Potential Benefits, GAO-22-104380, (Nov. 16, 2021), availableat https://www.gao.gov/products/gao-22-104380; Cochran, KellyThompson, Michael Stegman, and Colin Foos, Utility, Telecommunications, andRental Data in Underwriting Credit, FinRegLab and Urban Institute, (Lastupdated: Mar. 2022), available at https://finreglab.org/research/utility-telecommunications-and-rental-data-in-underwriting-credit/; and Bowers, Lauren,“Using Alternative Credit Data for Credit Underwriting”, Experian, (Feb. 13,2024), available athttps://www.experian.com/blogs/insights/using-alternative-credit-data-credit-underwriting/.