Leveling the Credit Playing Field: What You Need to Know About The New Credit Access & Inclusion Act of 2017
There’s an imbalance in the modern credit reporting industry.
If you’ve ever been told that you need to open more credit cards or take on additional loans just so that you can build your credit history, you’ve experienced it firsthand. Currently, credit reports rely almost exclusively on data about how consumers fulfill their debt obligations — ignoring the plentiful amounts of positive data that is available about how well they fulfill other recurring payment obligations that aren’t debt-based, such as monthly rental or utility payments. At RentTrack, we believe that every American citizen should have the right to build his or her credit without going into debt — which is why we’ve made it our mission to provide positive rental payment information to all three credit bureaus. Thanks to the efforts of bipartisan Congressional lawmakers led by Representatives Keith Ellison (D-MN) and Robert Pittenger (R-NC), this ideal is now acknowledged in new legislation passed in December: the Credit Access and Inclusion Act of 2017.
Passed unanimously, this bill is predicted to help nearly 100 million Americans either establish or raise their credit scores “on their own merit.” The law encourages utility companies, telecom companies, and landlords to report on-time payments to credit reporting agencies. This will make it possible for families and individuals with little or no credit to build credit scores based on the complete picture of their rental payment histories.
Using what Representative Ellison calls “predictive alternative data” to access creditworthiness – for example, consistently paying rent on time – is not a new concept. As pioneers in the rent reporting space, and one of the few companies today that reports rent to all three top credit bureaus, at RentTrack we consistently see the benefits firsthand. For example, it’s not uncommon to see scores increase an average of 29+ points in two months, and 132+ points over two years from reporting rent.
These substantial benefits are why we’ve focused on making rent reporting available to any tenant, anywhere — regardless of whether or not their landlord wants to participate. Although we offer many additional benefits and accounting software integrations for property managers who see the value of rent reporting, we’re one of the few companies that has made it possible for any tenant to initiate rent reporting on his or her own behalf, even without a landlord’s participation. We believe rent reporting should be available to all.
As Representative Ellison notes, “Millions of Americans lack credit scores or have scores that are too low to gain access to affordable credit. The problem disproportionately affects young people, African-Americans, Latinos and immigrants, many of whom can’t establish a credit score without taking on debt.” Representative Pittenger concurs, adding that he is “honored to help these families by supporting legislation which creates a level playing field and increases economic opportunity.”
Although the law doesn’t mandate that rent reporting must be an option provided by all property managers and owners for all renters, it still represents a positive step in the right direction by officially acknowledging that rental payment data is an important part of the picture when evaluating a consumer’s creditworthiness. We will continue in the fight to make rent reporting a tenant’s right — actually mandated by law — so that it’s much more than just an option for for landlords and property managers.
Still, we’re thrilled to see the government take bipartisan action to support our citizens in improving their credit. By officially acknowledging that credit score improvements can and should be afforded to anyone with who can demonstrate fiscal responsibility without incurring additional debt, the dream of homeownership and financial stability is now much more likely to become reality for millions of hardworking people nationwide.