Alternative credit data may benefit consumers and creditors

In September 2012, Representative Jim Renacci of Ohio introduced a bill, H.R. 6363 to the House of Representatives aimed to amend current laws regarding credit access and reporting in order to include alternative data that may assist consumer credit scores. The additional data would be collected outside of the three large credit agencies in this bill and would encourage the use of records such as payments to public utilities to determine the creditworthiness of the consumer. Some industry insiders including Rachel Schneider and Rob Levy of American Banker Magazine believe that this will be positive for the consumer and further that lending institutions could tap into markets that have previously been underserved, a figure which equates to 68 million adults presently residing in the United States. If this bill is successfully passed, consumer credit reports from Equifax, Experian and TransUnion will still hold a major sway on the decisions of creditors, but a more realistic picture may be painted of a particular lendee. Therefore, creditors will be able to more carefully and fully determine their risks, which is good for lenders and might boost confidence in loan seekers.