,,ib ,union ,calendar ,no4 #bdh #aafth ,,congress #ast ,session ,h4 ,r4 #cfbi ,report ,no4 #aaf-cjg ,,in ,,the ,,house ,,of ,,representatives ,july #i1 #bjai ,mr4 ,lynch introduced the following bill2 which was referred to the ,committee on ,financial ,services ,november #ba1 #bjai;,additional sponsor3 ,mr4 ,cleaver ,november #ba1 #bjai ,reported with an amendment1 committed to the ,committee of the ,whole ,house on the ,state of the ,union1 and ordered to be printed ,strike out all after the enacting clause and insert the part printed in italic ,for text of introduced bill1 see copy of bill as introduced on ,july #i1 #bjai ,a ,,bill ,to amend the ,fair ,credit ,reporting ,act to establish clear ,federal oversight of the development of credit scoring models by the ,bureau of ,consumer ,financial ,protection1 and for other purposes4 #a4 ,short title ,this ,act may be cited as the ,clarity in ,credit ,score ,formation ,act of #bjai4 #b4 ,findings ,congress finds the following3 7#a7 ,the ,february #bjae report of the ,bureau of ,consumer ,financial ,protection titled ,consumer ,voices on ,credit ,reports and ,scores found that some consumers are reluctant to comparison shop for loans and other types of consumer credit products out of fear that they will lower their credit scores by doing so4 7#b7 ,the ,bureau of ,consumer ,financial ,protection found that one of the most common barriers for people in reviewing their own credit reports and shopping for the best credit terms was a lack of understanding of the differences between soft and hard inquiries and whether requesting a copy of their own report would adversely impact their credit standing4 7#c7 ,the ,bureau of ,consumer ,financial ,protection revealed that consumers with accurate perceptions of their creditworthiness may be better equipped to shop for favorable credit terms4 #c4 ,consumer ,bureau oversight of credit scoring models ,the ,fair ,credit ,reporting ,act 7#ae ,u4,s4,c4 #afha et seq47 is amended-- 7#a7 by adding at the end the following new section3 #fcj4 ,credit scoring models 7a7 ,validated credit scoring models ,not later than #a year after the date of the enactment of this section1 the ,bureau shall 7in consultation with the ,board of ,governors of the ,federal ,reserve ,system1 the ,comptroller of the ,currency1 the ,board of ,directors of the ,federal ,deposit ,insurance ,corporation1 and the ,national ,credit ,union ,administration ,board7 issue final regulations applicable to any person that creates1 maintains1 utilizes1 or purchases credit scoring models used in making credit decisions to establish standards for validating the accuracy and predictive value of all such credit scoring models1 both before release for initial use and at regular intervals thereafter1 for as long as such credit scoring models are made available for purchase or use by such person4 7b7 ,prohibition ,at least once every #b years1 the ,bureau shall conduct a review of credit scoring models to determine whether the use of any particular factors1 or the weight or consideration given to certain factors by credit scoring models1 is inappropriate1 including if such factors do not enhance or contribute to the accuracy and predictive value of the models4 ,upon the conclusion of its review1 the ,bureau may prohibit a person described in subsection 7a7 from weighing1 considering1 or including certain factors in1 or making available for purchase or use1 certain credit scoring models or versions1 as the ,bureau determines appropriate4 2 and 7#b7 in the table of contents for such ,act1 by adding at the end the following new item3 #fcj4 ,credit scoring models4 4 #d4 ,consumer ,bureau study and report to ,congress on the impact of non-traditional data 7a7 ,study ,the ,bureau of ,consumer ,financial ,protection shall carry out a study to assess the impact 7including the availability and affordability of credit and other noncredit decisions1 the potential positive and negative impacts on consumer credit scores1 and any unintended consequences7 of using traditional modeling techniques or alternative modeling techniques to analyze non-traditional data from a consumer report and of including non-traditional data on consumer reports on the following3 7#a7 ,consumers with no or minimal traditional credit history4 7#b7 ,traditionally underserved communities and populations4 7#c7 ,consumers residing in rural areas4 7#d7 ,consumers residing in urban areas4 7#e7 ,racial and ethnic minorities and women4 7#f7 ,consumers across various income strata1 particularly consumers earning less than #abj percent of the area median income 7as defined by the ,secretary of ,housing and ,urban ,development74 7#g7 ,immigrants1 refugees1 and non-permanent residents4 7#h7 ,minority financial institutions 7as defined under section #cjh7;b7 of the ,financial ,institutions ,reform1 ,recovery1 and ,enforcement ,act of #aihi 7#ab ,u4,s4,c4 #adfc note77 and community financial institutions4 7#i7 ,consumers residing in federally assisted housing1 including consumers receiving ,federal rental subsidies4 7b7 ,additional considerations ,in assessing impacts under subsection 7a71 the ,bureau of ,consumer ,financial ,protection shall also consider impacts on-- 7#a7 the privacy1 security1 and confidentiality of the financial1 medical1 and personally identifiable information of consumers2 7#b7 the control of consumers over how such information may or will be used or considered2 7#c7 the understanding of consumers of how such information may be used or considered and the ease with which a consumer may decide to restrict or prohibit such use or consideration of such information2 7#d7 potential discriminatory effects2 and 7#e7 disparate outcomes the use or consideration of such information may cause4 7c7 ,consideration of recent ,government studies ,in assessing impacts under subsection 7a71 the ,bureau of ,consumer ,financial ,protection shall also consider recent ,government studies on alternative data1 including-- 7#a7 the report of the ,bureau of ,consumer ,financial ,protection titled ,,cfpb ,data ,point3 ,becoming ,credit ,visible 7published ,june #bjag72 and 7#b7 the report of the ,comptroller ,general of the ,united ,states titled ,financial ,technology3 ,agencies ,should ,provide ,clarification on ,lenders' ,use of ,alternative ,data 7published ,december #bjah74 7d7 ,report ,not later than #a year after the date of the enactment of this ,act1 the ,bureau of ,consumer ,financial ,protection shall issue a report to the ,committee on ,financial ,services of the ,house of ,representatives and the ,committee on ,banking1 ,housing1 and ,urban ,affairs of the ,senate containing all findings and determinations1 including any recommendations for any legislative or regulatory changes1 made in carrying out the study required under subsection 7a74 7e7 ,definitions ,in this section3 7#a7 ,alternative modeling techniques ,the term alternative modeling techniques means statistical and mathematical techniques that are not traditional modeling techniques1 including decision trees1 random forests1 artificial neutral networks1 nearest neighbor1 genetic programming1 and boosting algorithms4 7#b7 ,consumer report ,the term consumer report has the meaning given such term in section #fjc of the ,fair ,credit ,reporting ,act 7#ae ,u4,s4,c4 #afha;a74 7#c7 ,non-traditional data ,the term non-traditional data means data related to telecommunications1 utility payments1 rent payments1 remittances1 wire transfers1 data not otherwise regularly included in consumer reports issued by consumer reporting agencies described under section #fjc7p71 and such other items as the ,bureau of ,consumer ,financial ,protection deems appropriate4 7#d7 ,traditional modeling techniques ,the term traditional modeling techniques means statistical and mathematical techniques 7including models1 algorithms1 linear and logistic regression methods1 and their outputs7 that are traditionally used in automated underwriting processes4 ,november #ba1 #bjai ,reported with an amendment1 committed to the ,committee of the ,whole ,house on the ,state of the ,union1 and ordered to be printed