Rep. Nikema Williams (D-Ga.) reintroduced legislation on Thursday aimed at expanding access to mortgage credit by requiring lenders, at an applicant’s request, to consider additional financial information not typically reflected in traditional credit scores.
The legislation — titled the Expanding Access to Credit through Consumer-Permissioned Data Act and shared exclusively with HousingWire ahead of its reintroduction — would amend the Equal Credit Opportunity Act (ECOA) by requiring mortgage lenders to consider alternative financial data when evaluating borrowers.
Under the bill, lenders would be required to consider consumer-authorized alternative financial data, including rental payment history, bank-statement information and other payment records not typically included in traditional credit reports, if a mortgage applicant requests it and authorizes its use.
The legislation would also require automated underwriting systems to incorporate consumer-permissioned data into mortgage credit decisions.
Williams, who represents Georgia’s 5th Congressional District and is a member of the House Financial Services Committee, said the legislation is intended to help consumers who are “credit invisible” despite demonstrating a history of paying their bills on time.
“I’ve been unbanked. I know what it’s like to work hard, pay your bills and do everything right, only to have the financial system tell you that you don’t qualify,” Williams said in a statement.
Williams said she is now a homeowner and wants others to have the same opportunity. She also framed the measure as a step toward narrowing wealth disparities.
“Homeownership is one of the most powerful tools we have to build generational wealth and close the racial wealth gap,” she said. “My legislation will expand access to homeownership by recognizing financial responsibility wherever it’s found, helping more families secure the promise of America and build lasting wealth for future generations.”
According to findings included in the bill, approximately 32 million Americans either lack a credit history with the nation’s major credit reporting agencies or do not have enough credit history to generate a score. The legislation cites prior research from the Consumer Financial Protection Bureau (CFPB) showing that these consumers are disproportionately low-income, younger and people of color.
Supporters argue that incorporating alternative data into mortgage underwriting could help expand access to credit for borrowers with limited traditional credit histories while providing lenders with a more complete picture of an applicant’s financial behavior.
The bill would require lenders to notify mortgage applicants of their right to submit additional credit information and explain the potential benefits of doing so. Those notices would be required in the eight most commonly spoken languages among individuals with limited English proficiency.
The measure also directs the CFPB to develop implementing regulations and requires federal agencies and developers of mortgage underwriting systems to ensure compliance with the new requirements.
The legislation is co-sponsored by Reps. Sylvia Garcia (D-Texas), Bonnie Watson Coleman (D-N.J.), Gwen Moore (D-Wis.) and Alma Adams (D-N.C.). The Consumer Federation of America and the National Consumer Law Center are also endorsing the bill
If enacted, the CFPB would have 18 months to issue final rules implementing the legislation before the requirements take effect.
