Building Credit Access for Veterans Act of 2021
Bill: S.1838 | Sponsor: Sen. Scott, Tim (R-SC)
Policy area: Armed Forces and National Security

Summary:
Building Credit Access for Veterans Act of 2021
This bill requires the Department of Veterans Affairs (VA) to implement a pilot program to assess the feasibility and advisability of using alternative credit scoring information or models to improve the determination of creditworthiness of certain individuals and to increase the number of such individuals who are able to obtain VA housing and small business loans. Specifically, the program is for veterans or members of the Armed Forces who are eligible for VA housing or small business loans and have insufficient credit history.
Under the program, the VA must assess the feasibility and advisability of establishing criteria for acceptable commercially available credit scoring models to be used by lenders for the purpose of guaranteeing or insuring a VA housing or small business loan.
Participation is voluntary on an opt-in basis for lenders, borrowers, and individuals.
The VA must conduct outreach to lenders and individuals to inform them of the pilot program.

To require the Secretary of Veterans Affairs to carry out a pilot 
 program on using alternative credit scoring information for veterans 
        and members of the Armed Forces, and for other purposes.

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

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Building Credit Access for Veterans 
Act of 2021''.

SEC. 2. DEPARTMENT OF VETERANS AFFAIRS PILOT PROGRAM ON USE OF 
              ALTERNATIVE CREDIT SCORING INFORMATION OR CREDIT SCORING 
              MODELS.

    (a) Pilot Program Required.--
            (1) In general.--Not later than one year after the date of 
        the enactment of this Act, the Secretary of Veterans Affairs 
        shall commence carrying out a pilot program that will assess 
        the feasibility and advisability of--
                    (A) using alternative credit scoring information or 
                credit scoring models using alternative credit scoring 
                methodology for an individual described in paragraph 
                (2)--
                            (i) to improve the determination of 
                        creditworthiness of such an individual; and
                            (ii) to increase the number of such 
                        individuals who are able to obtain a loan 
                        guaranteed or insured under chapter 37 of title 
                        38, United States Code; and
                    (B) in consultation with such entities as the 
                Secretary considers appropriate, establishing criteria 
                for acceptable commercially available credit scoring 
                models to be used by lenders for the purpose of 
                guaranteeing or insuring a loan under chapter 37 of 
                title 38, United State Code.
            (2) Individual described.--An individual described in this 
        paragraph is a veteran or a member of the Armed Forces who--
                    (A) is eligible for a loan under chapter 37 of 
                title 38, United States Code; and
                    (B) has an insufficient credit history for a lender 
                or the Secretary to determine the creditworthiness of 
                the individual.
            (3) Alternative credit scoring information.--Alternative 
        credit scoring information described in paragraph (1)(A) may 
        include proof of rent, utility, and insurance payment 
        histories, and such other information as the Secretary 
        considers appropriate.
    (b) Voluntary Participation.--
            (1) In general.--The Secretary shall ensure that any 
        participation in the pilot program is voluntary on an opt-in 
        basis for a lender, a borrower, and an individual described in 
        subsection (a)(2).
            (2) Notice of participation.--Subject to paragraph (3), any 
        lender who participates in the pilot program shall--
                    (A) notify each individual described in subsection 
                (a)(2) who, during the pilot program, applies for a 
                loan under chapter 37 of title 38, United States Code, 
                from such lender, of the lender's participation in the 
                pilot program; and
                    (B) offer such individual the opportunity to 
                participate in the pilot program.
            (3) Limitation.--
                    (A) In general.--The Secretary may establish a 
                limitation on the number of individuals and lenders 
                that may participate in the pilot program.
                    (B) Report.--If the Secretary limits participation 
                in the pilot program under subparagraph (A), the 
                Secretary shall, not later than 15 days after 
                establishing such limitation, submit to Congress a 
                report setting forth the reasons for establishing such 
                limitation.
    (c) Approval of Credit Scoring Models.--
            (1) In general.--A lender participating in the pilot 
        program may not use a credit scoring model under subsection 
        (a)(1)(A) until the Secretary has reviewed and approved such 
        credit scoring model for purposes of the pilot program.
            (2) Publication of criteria.--The Secretary shall publish 
        in the Federal Register any criteria established under 
        subsection (a)(1)(B) for acceptable commercially available 
        credit scoring models that use alternative credit scoring 
        information described in subsection (a)(1)(A) to be used for 
        purposes of the pilot program.
            (3) Considerations; approval of certain models.--In 
        selecting credit scoring models to approve under this section, 
        the Secretary shall--
                    (A) consider the criteria for credit score 
                assessments under section 1254.7 of title 12, Code of 
                Federal Regulations; and
                    (B) approve any commercially available credit 
                scoring model that has been approved pursuant to 
                section 302(b)(7) of the Federal National Mortgage 
                Association Charter Act (12 U.S.C. 1717(b)(7)) or 
                section 305(d) of the Federal Home Loan Mortgage 
                Corporation Act (12 U.S.C. 1454)(d)).
    (d) Outreach.--To the extent practicable, the Secretary shall 
conduct outreach to lenders and individuals described in subsection 
(a)(2) to inform such persons of the pilot program.
    (e) Report.--
            (1) In general.--Not later than two years after the date of 
        the enactment of this Act, the Secretary shall submit to 
        Congress a report on the pilot program.
            (2) Contents.--The report submitted under paragraph (1) 
        shall include the following:
                    (A) The findings of the Secretary with respect to 
                the feasibility and advisability of using alternative 
                credit scoring information or credit scoring models 
                using alternative credit scoring methodology for 
                individuals described in subsection (a)(2).
                    (B) A description of the efforts of the Secretary 
                to assess the feasibility and advisability of using 
                alternative credit scoring information or credit 
                scoring models as described in subparagraph (A).
                    (C) To the extent practicable, the following:
                            (i) The rate of participation in the pilot 
                        program.
                            (ii) An assessment of whether participants 
                        in the pilot program benefitted from such 
                        participation.
                    (D) An assessment of the effect of the pilot 
                program on the subsidy rate for loans guaranteed or 
                insured by the Secretary under chapter 37 of title 38, 
                United States Code.
                    (E) Such other information as the Secretary 
                considers appropriate.
    (f) Termination.--
            (1) In general.--The Secretary shall complete the pilot 
        program required by subsection (a)(1) not later than September 
        30, 2025.
            (2) Effect on loans and applications.--The termination of 
        the pilot program under paragraph (1) shall not affect a loan 
        guaranteed, or for which loan applications have been received 
        by a participating lender, on or before the date of the 
        completion of the pilot program.
    (g) Insufficient Credit History Defined.--In this section, the term 
``insufficient credit history'', with respect to an individual 
described in subsection (a)(2), means that the individual does not have 
a credit record with one of the national credit reporting agencies or 
such credit record contains insufficient credit information to assess 
creditworthiness.
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