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NIADA Legislative Watch


NIADA is your voice in Washington D.C., advocating for independent dealers, the used vehicle industry and small business.

NIADA is your voice in Washington D.C., advocating for independent dealers, the used vehicle industry and small business. Here's a look at the latest news:

Four Democrats on the House Financial Services Committee, led by chairwoman Maxine Waters (D-Calif.), have begun looking into the use of alternative data in lending.

The group, which also included Rep. Al Green (D-Texas), Rep. Bill Foster (D-Ill.), Rep. Stephen Lynch (D-Mass.) and Rep. Josh Gottheimer (D-N.J.), sent a letter to the nonpartisan Government Accountability Office “requesting information about the benefits and drawbacks of alternative data in mortgage lending and the role of the federal government in overseeing the use of alternative data by credit reporting agencies and lenders,” according to a statement released by the committee.

Noting that the majority of consumers ages 18-29 have cellphones but only a third have credit cards, the letter acknowledged alternative data such as telecommunications payment history “can help lenders identify creditworthy potential borrowers [they] would otherwise miss,” allowing CRAs “to score previously unscorable millennials and other consumers who lack a typical credit history.”

However, the legislators added “questions persist” about how using alternative data in lending decisions might affect compliance with fair lending laws, including the Equal Credit Opportunity Act.

“While some alternative data, such as rental payment history, might provide an objective measure of creditworthiness, others might enable discrimination on the basis of a protected class or infringe on consumer privacy.”

While the letter specifically asked about mortgage lending, it seems likely the committee's interest will extend into other areas, including auto lending, in the foreseeable future.

By Shaun Petersen
Shaun Petersen is NIADA's senior vice president of legal and government affairs.

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