The Credit Access and Inclusion Act Aims to Open Up Credit Availability to Low-Income and Minority Consumers

By Robin E. Perkins

On June 25, 2018, the House passed legislation known as the Credit Access and Inclusion Act of 2017, with bipartisan support (H.R. 5078). The bill is intended to allow low-income and minority Americans more access to credit and better credit options. The bill allows non-traditional payments, such as consumers’ cellphone, rent and utilities payments to be reported to credit reporting agencies (Equifax, Experian and TransUnion), with the expectation that this positive payment data will establish a positive credit score, and will in turn allow access to lower-cost loans, cheaper car payments, or mortgage qualification. 

The ultimate goal is that with these additional means of establishing a credit score, consumers who previously had no access to credit, will now have the opportunity to enjoy the economic rewards that come with positive credit scores. And this will cause a positive impact in their overall financial health, and create the foundation for further financial growth and success.

However, some consumer rights industry groups and other critics are concerned about the broader impact. While the bill is intended to help those with positive payment histories, for those consumers who struggle to timely pay cellphone, rent and utilities, this bill will cause a negative credit score, where previously there was none. And no credit score is better than a bad one. Especially where credit scores are considered by employers and insurers in making hiring decisions and determining access to insurance policies.

Additionally, it is unclear whether telecommunication companies and landlords will voluntarily agree to report, as they currently do not report to credit agencies. While large entities may already have the infrastructure in place or otherwise be willing to report, smaller telecommunication companies, property owners and managers may be unwilling or unable to invest the time and money required to report. Thus, the data reported may likely be inconsistent and incomplete. And without a reporting requirement – the intended benefits could be confined to a smaller group of consumers, and the rest left unable to take advantage of the bill as a result of these factors beyond their control.  

Finally, there is concern that unscrupulous high-interest rate lenders might take advantage of this new pool of previously unavailable consumers. Certainly falling prey to high-interest loans counteracts the value from more traditional lending opportunities.   

While yet unclear what the overall impact and result will be upon previously “credit invisible” Americans, the House appears hopeful that this bill will allow consumers to benefit from their timely payments and build a credit score that will open up access to previously unavailable means of better credit and put them on a path to greater financial security and success.