During the American Bankers Association’s Regulatory Compliance Conference this week, Grovetta Gardineer, a senior official at the OCC, said the regulator is working to find nontraditional ways to establish a good credit history for those with no credit.
“We are discussing financial inclusion around access to credit, in particular, and bringing together financial institutions, civil rights organization, fintechs and a lot of incredibly bright people,” she said.
Through a program called Project Reach, which stands for Roundtable for Economic Access and Change, the OCC is bringing together banks, community organizations and technology partners to synthesize a credit score from alternative data so that the OCC can validate such a score for banks to use. People who lack a credit score have difficulty getting mortgages, credit cards and securing other lending but are paying rent, utilities and other recurring financial obligations on time, data that could be used for an alternative credit score.
According to figures cited by Gardineer, there are 45-65 million people in the United States that have “either no credit file or a very thin credit file,” which is an “obstacle to them being able to build a financial foundation that would help them establish generational wealth,” she said, adding that most of these individuals are minorities. Gardineer called them “credit invisibles.” Project Reach is part of the OCC’s minority outreach work. In addition to credit accessibility, the program also is focused on affordable housing and minority-owned banks. “I think this is a significant step for many of our financial institutions,” Gardineer said.
Gardineer also commented on the Community Reinvestment Act and how it may be revised in the near future, saying that the acting comptroller of the OCC has indicated that he’s reviewing the 2020 CRA rule. “He intends to make a decision on the path forward, and all options are on the table,” she said. “We are hoping to give him the information he needs so he can make a final decision. Modernization of the CRA is of paramount priority. We need to update it in a way such that it meets its purpose to improve conditions in LMI communities across the country.”