I 

116TH CONGRESS 

1ST SESSION H. R. 3629 

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 Protection, and for other purposes. 

IN THE HOUSE OF REPRESENTATIVES 

JULY 9, 2019 

Mr. LYNCH introduced the following bill; which was referred to the Committee 

on Financial Services 

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 Protection, 

and for other purposes. 

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled, 

3 SECTION 1. SHORT TITLE. 

4 This Act may be cited as the ‘‘Clarity in Credit Score 

5 Formation Act of 2019’’. 

6 SEC. 2. FINDINGS. 

7 Congress finds the following: 


pbinns on DSK79D2C42PROD with BILLS
2 

•HR 3629 IH

1 (1) The February 2015 report of the Bureau of 

2 Consumer Financial Protection titled ‘‘Consumer 

3 Voices on Credit Reports and Scores’’ found that 

4 some consumers are reluctant to comparison shop 

5 for loans and other types of consumer credit prod6 ucts out of fear that they will lower their credit 

7 scores by doing so. 

8 (2) The Bureau of Consumer Financial Protec9 tion found that one of the most common barriers for 

10 people in reviewing their own credit reports and 

11 shopping for the best credit terms was a lack of un12 derstanding of the differences between ‘‘soft’’ and 

13 ‘‘hard’’ inquiries and whether requesting a copy of 

14 their own report would adversely impact their credit 

15 standing. 

16 (3) The Bureau of Consumer Financial Protec17 tion revealed that consumers with accurate percep18 tions of their creditworthiness may be better 

19 equipped to shop for favorable credit terms. 

20 SEC. 3. CFPB OVERSIGHT OF CREDIT SCORING MODELS. 

21 (a) IN GENERAL.—The Fair Credit Reporting Act 

22 (15 U.S.C. 1681 et seq.) is amended— 

23 (1) by adding at the end the following new sec24 tion: 


pbinns on DSK79D2C42PROD with BILLS
3 

•HR 3629 IH

1 ‘‘§ 630. Credit scoring models 

2 ‘‘(a) VALIDATED CREDIT SCORING MODELS.—Not 

3 later than 1 year after the date of the enactment of this 

4 section, the Bureau shall issue final regulations applicable 

5 to any person that creates, maintains, or purchases credit 

6 scoring models used in making credit decisions to establish 

7 standards for validating the accuracy and predictive value 

8 of all such credit scoring models, both before release for 

9 initial use and at regular intervals thereafter, for as long 

10 as such credit scoring models are made available for pur11 chase or use by such person. 

12 ‘‘(b) PROHIBITION.—At least once every 2 years, the 

13 Bureau shall conduct a review of credit scoring models to 

14 determine whether the use of any particular factors, or 

15 the weight or consideration given to certain factors by 

16 credit scoring models, is inappropriate, including if such 

17 factors do not enhance or contribute to the accuracy and 

18 predictive value of the models. Upon the conclusion of its 

19 review, the Bureau may prohibit a person described in 

20 subsection (a) from weighing, considering, or including 

21 certain factors in, or making available for purchase or use, 

22 certain credit scoring models or versions, as the Bureau 

23 determines appropriate.’’; and 

24 (2) in the table of contents for such Act, by 

25 adding at the end the following new item: 

‘‘630. Credit scoring models.’’. 


pbinns on DSK79D2C42PROD with BILLS
4 

•HR 3629 IH

1 (b) RULEMAKING.—Not later than the end of the 2- 

2 year period beginning on the date of the enactment of this 

3 Act, the Bureau of Consumer Financial Protection shall 

4 issue final rules to implement the amendments made by 

5 this section. 

6 SEC. 4. CFPB STUDY AND REPORT TO CONGRESS ON THE 

7 IMPACT OF NON-TRADITIONAL DATA. 

8 (a) STUDY.—The Bureau of Consumer Financial 

9 Protection shall carry out a study to assess the impact 

10 (including the availability and affordability of credit and 

11 other noncredit decisions, the potential positive and nega12 tive impacts on consumer credit scores, and any unin13 tended consequences) of using traditional modeling tech14 niques or alternative modeling techniques to analyze non15 traditional data from a consumer report and of including 

16 non-traditional data on consumer reports on the following: 

17 (1) Consumers with no or minimal traditional 

18 credit history. 

19 (2) Traditionally underserved communities and 

20 populations. 

21 (3) Consumers residing in rural areas. 

22 (4) Consumers residing in urban areas. 

23 (5) Racial and ethnic minorities and women. 

24 (6) Consumers across various income strata, 

25 particularly consumers earning less than 120 perVerDate Sep 11 2014 03:03 Jul 10, 2019 Jkt 034408 PO 00000 Frm 00004 Fmt 6652 Sfmt 6201 E:\BILLS\H3629.IH H3629

pbinns on DSK79D2C42PROD with BILLS
5 

•HR 3629 IH

1 cent of the area median income (as defined by the 

2 Secretary of Housing and Urban Development). 

3 (7) Immigrants, refugees, and non-permanent 

4 residents. 

5 (8) Minority financial institutions (as defined 

6 under section 308(b) of the Financial Institutions 

7 Reform, Recovery, and Enforcement Act of 1989 

8 (12 U.S.C. 1463 note)) and community financial in9 stitutions. 

10 (9) Consumers residing in federally assisted 

11 housing, including consumers receiving Federal rent12 al subsidies. 

13 (b) ADDITIONAL CONSIDERATIONS.—In assessing 

14 impacts under subsection (a), the Bureau of Consumer Fi15 nancial Protection shall also consider impacts on— 

16 (1) the privacy, security, and confidentiality of 

17 the financial, medical, and personally identifiable in18 formation of consumers; 

19 (2) the control of consumers over how such in20 formation may or will be used or considered; 

21 (3) the understanding of consumers of how 

22 such information may be used or considered and the 

23 ease with which a consumer may decide to restrict 

24 or prohibit such use or consideration of such infor25 mation; 


pbinns on DSK79D2C42PROD with BILLS
6 

•HR 3629 IH

1 (4) potential discriminatory effects; and 

2 (5) disparate outcomes the use or consideration 

3 of such information may cause. 

4 (c) REPORT.—Not later than 1 year after the date 

5 of the enactment of this Act, the Bureau of Consumer Fi6 nancial Protection shall issue a report to the Committee 

7 on Financial Services of the House of Representatives and 

8 the Committee on Banking, Housing, and Urban Affairs 

9 of the Senate containing all findings and determinations, 

10 including any recommendations for any legislative or regu11 latory changes, made in carrying out the study required 

12 under subsection (a). 

13 (d) DEFINITIONS.—In this section: 

14 (1) ALTERNATIVE MODELING TECHNIQUES.— 

15 The term ‘‘alternative modeling techniques’’ means 

16 statistical and mathematical techniques that are not 

17 traditional modeling techniques, including decision 

18 trees, random forests, artificial neutral networks, 

19 nearest neighbor, genetic programming, and boost20 ing algorithms. 

21 (2) CONSUMER REPORT.—The term ‘‘consumer 

22 report’’ has the meaning given such term in section 

23 603 of the Fair Credit Reporting Act (15 U.S.C. 

24 1681a). 


pbinns on DSK79D2C42PROD with BILLS
7 

•HR 3629 IH

1 (3) NON-TRADITIONAL DATA.—The term ‘‘non2 traditional data’’ means data related to tele3 communications, utility payments, rent payments, 

4 remittances, wire transfers, data not otherwise regu5 larly included in consumer reports issued by con6 sumer reporting agencies described under section 

7 603(p), and such other items as the Bureau of Con8 sumer Financial Protection deems appropriate. 

9 (4) TRADITIONAL MODELING TECHNIQUES.— 

10 The term ‘‘traditional modeling techniques’’ means 

11 statistical and mathematical techniques (including 

12 models, algorithms, linear and logistic regression 

13 methods, and their outputs) that are traditionally 

14 used in automated underwriting processes. 

Æ 


pbinns on DSK79D2C42PROD with BILLS