Above: Gottheimer announces legislation to lower the barriers to accessing credit for millions of Americans.
Today, August 13, 2019, U.S. Congressman Josh Gottheimer (NJ-5) announced two new bipartisan bills to fix two significant pillars of our credit system in the United States that are in dire need of an upgrade: how credit scores are calculated and how our credit is reported. Gottheimer’s Accurate Access to Credit Information Act will create a single, easy-to-use portal providing free access to a credit score and all three major credit bureau reports, with the ability to identify errors and initiate disputes, lift security freezes, and information on who has accessed your report over the prior two years. Gottheimer’s Credit Access and Inclusion Act will grant consumers the power to opt-in to include their rent and telecom payments as data sources when creating a credit score.
According to the Federal Trade Commission, 21% of all consumers had verified errors in their credit report. These factors directly impact a family’s ability to get a loan to start a small business, lease a car, be approved for a mortgage, or determine the APR to pay on a credit card.
Gottheimer noted that both credit reports and scores, and their accuracy, play a huge role in determining a consumer’s financial health and that a lack of credit history can disproportionately affect minority and lower income communities. African-American and Hispanic families are denied credit more often than white families with the same income.
“Not only do both your credit report and credit score decide your ability to obtain credit at a fair price, but they’re also used by countless sectors, from insurance companies to landlords and even employers to decide if you’re welcome or not,” said Congressman Josh Gottheimer (NJ-5). “Without a sufficient credit history, or file, as it’s called, consumers face incredibly difficult barriers to accessing credit or they face exorbitantly high costs. On top of that, this issue, unfortunately, disproportionately impacts consumers who are African-American or Hispanic, and people who live in lower-income neighborhoods.”
According to a 2015 study, approximately 26 million people are credit invisible, meaning they have no credit history at any one of the three national credit bureaus.
Gottheimer continued, “Traditionally, you build your credit through a credit card, a car loan, and a mortgage. But times are changing, especially for millennials and the newly banked. We are seeing more Americans rent instead of own, Uber and Lyft instead of lease a car, and use debit cards or Venmo instead of a credit card. In this new era, there needs to be a better way to create a comprehensive picture of a consumer’s creditworthiness – to add to their credit file – even if they don’t use the traditional sources of the past.”
Gottheimer made today’s announcement at the headquarters of Greater Bergen Community Action, an organization committed to helping people understand and improve their credit. Gottheimer was joined by Greater Bergen Community Action (GCBA) President and CEO Robert F. Halsch, Jr., GCBA Chief Operating Officer Dr. Allan DeGiulio, GCBA Vice President for Finance Robert Moore, New Jersey Citizen Action Executive Director Phyllis Salowe-Kaye, Bergen County Freeholder Chairwoman Germaine M. Ortiz, Bergen County Freeholder Vice Chairwoman Mary J. Amoroso, Hackensack Deputy Mayor Dave Sims, NAACP Bergen County Chapter Vice President Nathaniel Briggs and Economic Development Chair Randy Glover, and former New Jersey Governor Jim McGreevey.
“These two bills will be transformative for the 24 million Americans who are underbanked, and an additional 8 million who are not even connected to the banking system. These bills will open up access to opportunity for so many low income Americans who work hard every day, but because current consumer credit reporting agencies are not looking at their solid earning and payment histories, their credit scores do not reflect their true, responsible, earning and payment capacity. This legislation holds the promise of bringing millions into the mainstream banking system,” said Greater Bergen Community Action President and CEO Robert F. Halsch, Jr. “This is good for families, good for communities, and good for the economy.”
“Credit reports and scores play a critical role in the life of any consumer,” said Phyllis Salowe-Kaye, Executive Director of New Jersey Citizen Action. “But under-regulated Consumer Reporting Agencies too often report inaccurate credit scores that can cost anyone thousands of dollars in higher-priced credit, or result in the denial of a job, insurance coverage or an apartment rental. The Accurate Access to Credit Information Act will bring badly needed transparency and accountability to the credit industry, while the Credit Access and Inclusion Act will give consumers the chance to improve or repair their credit through expanded data used to measure responsible payment histories. We urge more legislators to back these bills which will bring financial stability to many New Jersey families. We thank Congressman Gottheimer for his leadership on this important issue. These bills will ensure consumers are treated fairly by the credit reporting system while giving many the opportunity to boost their scores and repair their credit. This is a good thing.”
“This is valuable legislation that provides an opportunity for working families, the poor, the formerly incarcerated, and for young people who seek to develop a credit history outside the traditional market. Traditionally, rent, cell phone bills, and other payments haven’t been included in these calculations. This is a seismic shift in giving people access to the American Dream and I thank Congressman Gottheimer for leading this charge,” said former New Jersey Governor and Chairman of the Board for the non-profit New Jersey Reentry Corporation.
“I want to thank Congressman Gottheimer for introducing this critical piece of legislation. We know that minority communities are denied credit more often than white communities with the same income. This legislation takes a huge step towards providing opportunities to access credit and to build credit through non-traditional means,” said NAACP Bergen County Chapter President Jeff Carter.
“The most important legislation, in my opinion, out of the two is the Credit Access and Inclusion Act. Allowing people to include their rent and telecom payments is a big win for the working people in our District. Not everyone can take a loan out with favorable interest rates if you don’t have credit to begin with, and this is especially true with new immigrants and minority communities,” said Bergen County Freeholder Chairwoman Germaine M. Ortiz.
“Success in today’s world is driven more and more by someone’s credit score. With these two bills, millions of Americans will be able to improve their credit and take another step towards achieving the American Dream,” said Bergen County Freeholder Vice Chairwoman Mary J. Amoroso.
“In my community, credit is critical. A lot of the jail population looks like me. When they come back to the street. they can’t find a decent place to live or a decent job. The most critical part is credit and access to credit,” said NAACP Bergen County Chapter Vice President Nathaniel Briggs. “It’s great that the doors are being opened to access credit and I thank the Congressman for introducing these bills.”
“The good thing that Congressman Gottheimer is doing is allowing people to opt-in and participate in the financial landscape of America,” said NAACP Bergen County Chapter Economic Development Chair Randy Glover. “As a member on the Executive Board of the NAACP, that’s one of the things we stand for. We stand for inclusion and for bringing people together and working together so we can have a better society and a better America.”
The Accurate Access to Credit Information Act:
- Creates a single, easy-to-use portal that gives consumers unlimited free access to all three of their major bureau consumer reports.
- Provides the ability to easily identify errors and initiate disputes, tools to lift and remove security freezes, information on who has accessed their report over the prior two years, and provide a credit score.
- Places all these tools in one simple place, with one secure log-in, with unlimited access, for free, forever.
The Credit Access and Inclusion Act:
- Provides consumers with the power to opt-in to include their rent and telecom payments as data sources when creating a credit score.
- Helps consumers with little or no credit history – those without traditional credit lines like mortgages, car loans, and credit cards – to create a more accurate and comprehensive picture of their credit.
Video of the announcement can be found here.
Gottheimer’s full remarks as prepared for delivery are below.
I want to thank our two excellent Freeholders, Amoroso and Ortiz, Governor McGreevey for his endless work and leadership helping to lift people up, whether that’s to help them improve their financial might or get a second chance after leaving prison. I’d also like to applaud Nathaniel Briggs, Jeff Carter, and the NAACP for living up, every day, to their core mission to broaden opportunity for minority communities.
I am thrilled to be here in Hackensack at the Greater Bergen Community Action, an organization committed to helping people understand and improve their credit. Through their Housing Counseling, Financial Empowerment, and Small Business Development Programs, they have helped countless residents right here in the Fifth District expand their access to credit, while simultaneously strengthening key safeguards over their data.
I’m here today because there are two significant pillars of our credit system in America that are in dire need of an upgrade: the way we calculate credit scores and the way they our credit is reported. Today, I’m announcing legislation that will significantly improve it, and ensure that more Americans can responsibly access the credit they’ve earned to raise a family or start a business.
Credit reports and credit scores both play a huge role in determining a consumer’s financial health. Not only do they decide your ability to obtain credit at a fair price, but they’re also used by countless sectors, from insurance companies to landlords and even employers to decide if you’re welcome or not. Your credit score impacts your ability to get a loan to start a small business, lease a car, what APR you pay on your credit card … you name it. Even cellphone companies look at credit scores to determine what payment plan you’re eligible for.
We also know that certain communities are disproportionately affected. African-American and Hispanic families are denied credit more often than white families with the same income. And, according to research from Zillow, in 2016, African-American families were more than two and half times as likely to be denied a conventional mortgage as white families.
What’s most aggravating about this antiquated system, as we’ve all experienced, is that our score, and how it’s determined, is largely a black box using secret formulas.
Despite their impact on nearly every aspect of your life, credit reports are often overflowing with errors. According to a Federal Trade Commission study, 21 percent of all consumers had verified errors in their credit report. That’s more than a fifth of all consumers who are paying more or can’t get credit in the first place!
These mistakes can cost you thousands of dollars in higher-priced credit, or worse yet, result in the denial of a job or apartment rental, or ability to buy a home. That’s just not right. According to Forbes, in 2017, thirty-two percent of applicants with less than perfect credit were denied mortgages.
These errors can include instances of bad information coming from reporting creditors, like data entry mistakes, and events credited to the wrong person either accidentally or through identity theft. More than 147 million people had their data compromised in the 2017 Equifax breach – a benchmark benchmark failure. That’s why, in October 2017, I immediately called for a swift response from Equifax, with concrete steps on how the company would remedy that crisis and improve their long-term processes. Even today, that breach, and too many others like it, have forced millions of Americans to jump through hoop after hoop to fix errors on their credit report that may not have been their fault.
If the data inaccuracies alone weren’t enough, trying to fix them is, quite frankly, a complete nightmare. Having to go to three separate websites, since the three major bureaus don’t talk to each other, and place three separate security freezes can be time consuming, confusing, and all around burdensome. That doesn’t even account for what it takes to actually fix a mistake when you find one.
Compound these problems with consumer data breaches, which continue to rear their ugly head as we’ve seen with Capital One and Equifax, where, again, 147 million people had their data compromised, and it’s crystal clear that something needs to change when it comes to understanding, accessing, and fixing our credit reports and the scores on them.
Plus, given that there are only three major credit bureaus, Equifax, Experian, or TransUnion, that have in essence cornered the marketplace, there has been very little incentive to actually innovate and address these issues.
Putting aside all of the problems with the credit report themselves, there is an equal need to fix a broken system when it comes to how we calculate credit scores.
According to a 2015 study, approximately eleven percent of adults in the United States, or about 26 million people, are credit invisible. That means they have no credit history at any one of the Big Three national credit bureaus.
Without a sufficient credit history, or file, as it’s called, consumers face incredibly difficult barriers to accessing credit or they face exorbitantly high costs. On top of that, this issue, unfortunately, disproportionately impacts consumers who are African-American or Hispanic, and people who live in lower-income neighborhoods.
There has also been a very clear shift in how people access and build credit. Traditionally, you build your credit through a credit card, a car loan, and a mortgage. But times are changing, especially for millennials and the newly banked and other new entrants. We are seeing more and more Americans rent instead of own, Uber and Lyft instead of lease a car, and use debit cards or Venmo instead of using a credit card. More than 40 million people have used Venmo since April 2018. Just 5 days ago, Uber announced they hit 100 million monthly active users for the first time.
In this new era, there needs to be a better way to create a comprehensive picture of a consumer’s creditworthiness – to add to their credit file — even if they don’t use all of the traditional sources from the past. We need to give the next generation of consumers the ability to build a stronger credit file through new data sources, and to do so in a way that protects their privacy. In an era of more information, why wouldn’t we want to do everything we can to help strengthen someone’s credit, presuming they’re open to it.
Alternative credit data is information used to evaluate someone’s creditworthiness that goes beyond the traditional data points we discussed – so new information like rent and cell phone bills. This data provides more insight and visibility to payment behaviors.
Adding the information from alternative credit data sources could lower costs for lenders and, in turn, benefit consumers through lower prices and greater access to credit, which is the ultimate goal.
Again, it’s become very clear that something must be done to address these twin challenges of credit reporting and credit scoring. Today, I am excited to announce that, in the coming weeks, I will be introducing not one, but two pieces of bipartisan legislation – the Accurate Access to Credit Information Act and the Credit Access and Inclusion Act. These bipartisan bills will help improve our country’s consumer reporting system, better protect consumer data, boost accuracy and alternative data usage in credit scores, and increase consumers’ access to credit.
My first bill, the Accurate Access to Credit Information Act, will create a single, easy-to-use portal that gives consumers unlimited free access to all three of their major bureau consumer reports, the ability to easily identify errors and initiate disputes, tools to lift and remove security freezes, information on who has accessed their report over the last two years, and, of course, provide a credit score. All of these tools in one simple place, with one secure log-in, with unlimited access, for free, forever. Talk about a one-stop shopping to help navigate a an age-old maze.
My legislation will also improve the dispute process for credit reporting, improves credit reporting accuracy, and improves data security over the credit bureaus to help stop an Equifax-level breach from ever happening again. No one ever wants to, or quite frankly, should have to deal with credit inaccuracies. That’s why we need to make the ability to fix and access credit reports cleaner, faster, and friendlier for everyone.
My second bill, the Credit Access and Inclusion Act, will give consumers the power to opt-in to include their rent and telecom payments as data sources when creating a credit score. This legislation will help consumers with little or no credit history or file – those who don’t have a great deal of traditional credit history – to create a more accurate and comprehensive picture of their credit, even if they do not have credit lines like mortgages, car loans, and credit cards. This is a great step to bring millennials, the newly banked, including so many in minority communities, into the credit system.
Everyone in North Jersey who pays their bills on time, every month, deserves a fair shot at building a credit history. It’s unfortunate that the current credit scoring system can often hurt some of our residents that need the most help. I’m proud to lead this bill to help North Jersey residents and citizens across America successfully boost their credit score.
I’m honored that this bipartisan legislation already has the support of groups ranging from the National Consumer Law Center to the National Association of Realtors, and I look forward to getting these crucial, bipartisan bills across the finish line.
Since I took office, I have been committed to helping families, farmers, entrepreneurs, and businesses of all sizes start, grow, thrive, and contribute to our economy. With these two bills, I am excited to help the people of the Fifth District build their credit reports and scores. And we need add other steps for affordability, including lower taxes, into the mix, too.
It’s time for both sides to work together – Democrats and Republicans – and get this done. It’s just common sense and it’s a win-win for consumers and for business. By working together to make sure those in North Jersey and across the country have a more secure and more robust financial future, I know that, right here in the greatest country in the world, our best days will always be ahead of us.
Thank you, God bless you, and may God continue to bless the United States of America.