SCR130

Sponsored by:

Senator TROY SINGLETON

District 7 (Burlington)

Senator DAWN MARIE ADDIEGO

District 8 (Atlantic, Burlington and Camden)

SYNOPSIS

Urges Congress to amend federal “Fair Credit Reporting Act” to require credit reporting agencies to include alternative data into consumer credit reports.

CURRENT VERSION OF TEXT

As introduced.

A Concurrent Resolution respectfully urging the United States Congress to amend the federal “Fair Credit Reporting Act.”

Whereas, The federal “Fair Credit Reporting Act,” (FCRA) 15 U.S.C. s.1681 et seq., was enacted in 1970 to promote the accuracy, fairness, and privacy of information contained in consumer credit reports; and

Whereas, Credit reporting agencies that collect and maintain information on individual consumer credit reports use that information in a credit scoring model to create a credit score that rates an individual’s capacity to repay a loan; and

Whereas, Having a good credit score can positively affect a consumer’s ability to get a mortgage, rent an apartment, and qualify for a job; and

Whereas, Nearly 20 percent of consumers in the United States have either no credit history to report or have a thin credit report that is unscorable by credit scoring models; and

Whereas, African American and Latino consumers are more likely to have no credit history or to have an unscored credit report; and

Whereas, Financial information not commonly reported to a credit reporting agency, such as a rent or utility payment, can be included to create a credit report that is scorable; and

Whereas, The New York City Comptroller’s Office conducted a study in 2017 that found that the inclusion of uncommonly reported information in consumer credit reports, also known as alternative data, created new credit scores for a third of participants without a credit score previously; and

Whereas, Certain credit reporting agencies, such as Experian and Equifax, offer the option of including alternative data in a consumer’s credit report; and

Whereas, Amending the FCRA to require a credit reporting agency to include alternative data in the credit report of a consumer would create credit scores for millions of consumers that have either no credit history to report or who have an unscored credit report; now, therefore,

Be It Resolved by the Senate of the State of New Jersey (the General Assembly concurring):

1. The Legislature of the State of New Jersey respectfully urges the United States Congress to amend the federal “Fair Credit Reporting Act” to require credit reporting agencies to include alternative data into consumer credit reports.

2. Copies of this resolution, as filed with the Secretary of State, shall be transmitted by the Secretary of the Senate or the Clerk of the General Assembly to the Majority and Minority Leaders of the United States Senate, the Speaker and Majority and Minority Leaders of the United States House of Representatives, and each member of the United States Congress elected from this State.

STATEMENT

This resolution respectfully urges the United States Congress to amend the federal “Fair Credit Reporting Act” (FCRA) to require credit reporting agencies to include alternative data into consumer credit reports.

The federal FCRA was enacted in 1970 to promote the accuracy, fairness, and privacy of information contained in consumer credit reports. Credit reporting agencies, which collect and maintain these reports, also use this information in credit scoring models to create a credit score, which rates a consumer’s capacity to repay a loan. Having a good score can positively affect a consumer’s ability to obtain a mortgage, rent an apartment, and qualify for a job. Unfortunately, nearly 20 percent of consumers in the United States have either no credit history to report or have a thin credit report that is unscorable by credit scoring models, with African Americans and Latinos more likely to fall under these categories.

In recent years, certain credit reporting agencies, such as Experian and Equifax, have been offering the consumer the option of including alternative data, which expands a consumer’s credit report by including information not commonly shown in a credit report, such as a rent or utility payment. Use of alternative data has been shown to be useful in expanding the number of people with access to a credit score, with a 2017 study by the New York City Comptroller’s office finding that the inclusion of alternative data in consumer credit reports created new credit scores for a third of participants. By amending the FCRA to require a credit reporting agency to include alternative data into the credit reports of consumers, millions of individuals will be able to obtain credits scores and access the benefits that having a credit score can offer.