Remittance processing solutions more critical if credit reporting bill amends FCRA

Unlike creditors in the mortgage, insurance, credit card or personal loan sectors, utility companies rarely report consumer payment habits to credit bureaus, unless accounts have fallen into delinquency. As such, the credit scores of consumers who consistently make on-time utility payments are rarely impacted positively.

In an effort to bolster the credit ratings of these consumers, two U.S. State Representatives – Jim Renacci of Ohio and Keith Ellison of Minnesota – have proposed House Bill 6363, which would amend the Fair Credit Reporting Act (FCRA) to compel utility companies to report credit information about borrowers to credit bureaus.

"One or two financial bumps in the road shouldn't leave hard working Americans struggling to repair an otherwise good credit history," Renacci said in a statement. "Those who have yet to gain credit should be able to use all of the tools available to them to establish their credit worthiness. Credit reporting should work for consumers, not against them."

The one group excluded from Renacci's assessment are those generally reliable borrowers who may occasionally miss a payment. In an assessment of the bill, the New York Times' "Bucks" blog notes that the bill, known as the Credit Access and Inclusion Act, could, according to critics, harm the credit reports of many borrowers. The article provides the example of those living in the Northeast, who may fall behind in their utility payments during winter, when they consume more energy, only to catch up during the summer months.

Should H.R. 6363 become law, increased pressure to process payments and remittance statements accurately will fall to utility companies that may not have previously forwarded credit information to consumer reporting agencies. With sophisticated remittance software, these creditors will be better able to manage their in-house remittance processing procedures and improve the cost of these functions.

Ultimately, the benefits extend to consumers, who can trust that the payment processing solutions of these creditors will not produce errors and taint their credit scores.

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