Lawmakers highlight need for financial literacy to improve credit

Lawmakers on both sides of the aisle said Tuesday that improved financial literacy would help bridge some of the gaps in access to obtaining credit.

“Rural communities are being left behind, urban communities are being left behind,” Rep. Patrick McHenry (R-N.C.) told moderator Steve Clemons at The Hill’s “Modern Credit Systems, Alternative Data & The American Dream” event.

“What unifies both of those communities is education training and economic opportunity. We need to make sure we’re raising the rest up,” said McHenry, the top Republican on the House Financial Services Committee.

“Things that tell me a lot about your creditworthiness are not actually a part of most credit files,” he said, arguing there is a need to expand the data used in the credit monitoring process.

Rep. @PatrickMcHenry on alternative data like utility and rent payments and expanding credit access: “things that tell me a lot about your creditworthiness are not a part of most credit files, and these are huge expenses for every American” #TheHillCredit https://t.co/iWwMq4B5wT pic.twitter.com/CwN7jNyrdz

— The Hill Events (@TheHillEvents) January 26, 2021

Speaking at the same event, Rep. Joyce Beatty (D-Ohio), chair of the House Financial Services subcommittee on diversity and inclusion, said financial literacy programs are needed to help younger generations build and maintain good credit.

“You have to start when young folks are in school…you have to understand all of the qualities and things that have to be in your portfolio to have good credit, or better yet, how to manage your money,” Beatty said.

.@RepBeatty on financial literacy: “You have to start when young folks are in school…you have to understand all of the qualities and things that have to be in your portfolio to have good credit, or better yet, how to manage your money” #TheHillCredit https://t.co/iWwMq4B5wT pic.twitter.com/ZPBKXF70xR

— The Hill Events (@TheHillEvents) January 26, 2021

The Ohio Democrat went on to say that credit also needs to be viewed through the lens of inequality. 

“I think we have to look at what history has taught us,” Beatty said at the event sponsored by FICO, noting the detrimental effects of certain lending practices over the years on Black and brown communities. “We have to look at the inequalities and the disparities that we have.”