Fitzpatrick Bill Improves Access to Credit
WASHINGTON, D.C. - Congressman Mike Fitzpatrick (R-PA) Thursday introduced legislation that would allow for a more thorough, fair evaluation of an individual’s credit worthiness.
The bipartisan Credit Access and Inclusion Act [HR 2538], introduced with Congressman Keith Ellison (D-MN), would allow utility and telecom companies to report all on-time payment data to credit reporting agencies - helping those with little to no credit build their credit scores based on a full picture of their payment history.
“While laws on the books already allow energy, utility and telecom service to report payment data to credit bureaus, those that do report, primarily report negative payment data,” said Fitzpatrick. “So right now, customers’ credit scores are being punished for poor behavior but not recognized for their good behavior. This harmful system needs to change.”
“Thousands of Minnesota families are trapped in debt their whole lives because of credit card bills or an early loan. The average Minnesotan carries over $10,000 in credit card debt,” said Ellison. “This bill makes it easier for students and working families to build their credit simply by reporting the on-time payments they already make on their phone or utilitybills.”
Nearly 100 million Americans would be able to establish a credit score, or raise their existing score with the implementation of this legislation. People who lack accurate credit scores face significant economic harm. Those with no or insufficient credit history are considered high risk, and are rejected when they apply for credit. People with no credit score also pay higher rates for car and homeowners’ insurance.
“It is important that low income and underserved individuals, especially those with no or limited credit have a way to establish and build positive credit,” said Lynne Cutler, President of the Women’s Opportunity Resource Center of Pennsylvania. “At WORC we use alternative payment histories as part of our micro loan decision so this would make this opportunity open to all.”
Extensive research from the Policy Economic Research Council (PERC) finds that adding just one utility enables 74% of credit invisible customers to obtain credit scores. More accurate credit scores enable lenders to make more loans.
Including alternative payment history will benefit consumers across the demographic spectrum. For example, 15% of young people ages 18 to 25 move from having no credit score to being able to qualify for credit at prime—not subprime--rates. This expanded reporting will do the same for 11% of adults over age 66, 15% of Latinos, 10% of African Americans, and 7% of renters. Approximately 55% of consumers who had suffered a bankruptcy or had very late payments saw their credit scores increase when a utility or telecom payment was included.
“Reporting utility and telecoms payments to credit reporting agencies provides a simple, universal solution that builds credit scores without federal funds or mandates,” added Fitzpatrick. “This easy-to-support legislation works for those who need access to crucial loans the most, and levels the playing field in the credit market.”
Congressman Mike Fitzpatrick is serving his third term in the U.S. House of Representatives. He represents Pennsylvania’s 8th district which includes all of Bucks County as well as a portion of Montgomery County. He serves as the Vice Chairman of the House Financial Services Subcommittee on Oversight and Investigations.
Congressman Keith Ellison represents Minnesota’s 5th Congressional District in the U.S. House of Representatives and serves on the House Committee on Financial Services.
Women’s Opportunities Resource Center (WORC) promotes social and economic self-sufficiency for economically disadvantaged individuals- primarily women and their families- through self-employment training, support services, incentivized savings programs, access to business and financial resources. WORC is the only organization in the Greater Philadelphia area that provides entrepreneurial training, loans and a savings program under one roof. WORC is a SBA micro-lender and its subsidiary company the Economic Opportunities Fund, is a certified Community Development Financial Institution.
The Policy and Economic Research Council (PERC) is a non-partisan, non-profit policy institute devoted to research, public education, and outreach on public and economic policy matters. PERC works with both the public and private sector, harnessing the power of market forces and harmonizing them with a clear public interest in servicing the greater good. Since 2002, PERC has engaged in ground-breaking economic research with a specific focus on information policy from quantifying the value of information flows to establishing benchmarks for consumer credit — with demonstrated policy impact.