On September 9th 2012 a bill called the Credit Access and Inclusion Act (HR 6363) was introduced by Representative Jim Renacci from Ohio. The bill suggests that public utilities should report account information to the credit bureaus. Today most utility providers do not report to the credit bureaus.
I’ve read the full text of the bill and, while well intentioned, there’s nothing in it that suggests utility providers could be forced or otherwise compelled to report anything to the credit bureaus. Further, there’s nothing that compels the credit bureaus to accept public utility data. Finally, the bill would simply modify the Fair Credit Reporting Act (FCRA) such that nothing in that law could be interpreted as to prevent the reporting of utility data to the credit bureaus. Here are my thoughts and concerns:
1. The problem with the bill is that there’s nothing in the current version of the FCRA that prohibits the reporting of utilities. In fact, public utilities aren’t even mentioned, at all, in any of the 84 pages of the FCRA.
2. The proposed Act would allow for something that’s already allowed by law and happening, albeit on a limited basis
3. If all public utilities starting reporting accounts to the credit bureaus we should all expect our bills to increase. The minute anyone places something on a consumer credit report they become liable under the Fair Credit Reporting Act and must put in place reasonable procedures to ensure the accuracy of credit reporting. This will mean additional staff, systems, and yes, expensive lawyers. We’ll all be called on to subsidize.
4. Be careful what you ask for. While the hypothesis of adding utilities to credit reports is solid and could help some people who have limited credit histories, it’s a two way street.
5. Full credit reporting means just that, full credit reporting. That means someone who is late paying their power bill could end up with late payments on their credit reports, just like if they missed a mortgage or credit card payment. Today if you’re late on a utility bill there is no damage to your credit reports. The only damage occurs if you default and the utility provider is forced to hire a collection agency.
6. I like the idea of utility credit reporting but this bill will do nothing to clear the path or incentivize utility providers to report to the credit bureaus. Besides, they’ve already got the ultimate response when customers stop paying their bills…they’ll simply shut off your power, water or gas.
Credit Reporting Expert, John Ulzheimer, is the President of Consumer Education at SmartCredit.com, the credit blogger for Mint.com, and a Contributor for the National Foundation for Credit Counseling. He is an expert on credit reporting, credit scoring and identity theft. Formerly of FICO, Equifax and Credit.com, John is the only recognized credit expert who actually comes from the credit industry. Follow him on Twitter here.