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A02692 Summary:

BILL NOA02692
 
SAME ASNo Same As
 
SPONSORForrest
 
COSPNSR
 
MLTSPNSR
 
Add §312, Fin Serv L
 
Establishes a working group to create a pilot program for an alternative system to a credit score for unbanked persons, undocumented immigrants and any other individuals who would benefit from such alternative system.
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A02692 Actions:

BILL NOA02692
 
01/22/2025referred to banks
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A02692 Memo:

NEW YORK STATE ASSEMBLY
MEMORANDUM IN SUPPORT OF LEGISLATION
submitted in accordance with Assembly Rule III, Sec 1(f)
 
BILL NUMBER: A2692
 
SPONSOR: Forrest
  TITLE OF BILL: An act to amend the financial services law, in relation to establishing a working group to create a pilot program for an alternative system to a credit score   PURPOSE OR GENERAL IDEA OF BILL: The purpose of this bill is to establish a working group within the New York State Department of Financial Services to develop a pilot program that creates an alternative creditworthiness system. This system is designedlor individuals who lack a traditional credit score, such as the unbanked, undocumented immigrants, and indigent populations.   SUMMARY OF SPECIFIC PROVISIONS: Section 1: Adds a new Section 312 to the Financial Services Law, mandat- ing the creation of a working group by the Superintendent of the Depart- ment of Financial Services. The working group will develop a pilot program to assess alternative methods of determining creditworthiness for individuals who do not possess a traditional credit score. Section 2: Establishes that this act shall take effect immediately.   JUSTIFICATION:, Traditional credit scoring systems are inherently biased against certain populations, particularly those who are unbanked, undocumented immi- grants, or indigent. These individuals often lack access to financial products and services due to their inability to meet the criteria set by standard credit evaluations. This bill seeks to address these inequities by developing an alternative system that more accurately reflects the creditworthiness of individuals traditionally excluded from the finan- cial system. The working group established by this bill will have the expertise necessary to consider innovative creditworthiness models, including those being developed in Europe and other jurisdictions. By incorporat- ing these alternative models, New York can create a more inclusive financial environment that provides equitable access to credit for all its residents. This initiative is crucial for fostering economic stability among vulnerable populations, ensuring they have the means to participate fully in the state's economy. Moreover, by piloting this program, New York positions itself as a leader in financial inclusivIty, potentially setting a precedent for other states to follow.   PRIOR LEGISLATIVE HISTORY: New bill.   FISCAL IMPLICATIONS: Minimal. The working group members will not receive compensation, though they may be reimbursed for expenses as approved by the Superintendent and the Division of Budget.   EFFECTIVE. DATE: This act shall take effect immediately upon becoming law.
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A02692 Text:



 
                STATE OF NEW YORK
        ________________________________________________________________________
 
                                          2692
 
                               2025-2026 Regular Sessions
 
                   IN ASSEMBLY
 
                                    January 22, 2025
                                       ___________
 
        Introduced  by M. of A. FORREST -- read once and referred to the Commit-
          tee on Banks
 
        AN ACT to amend the financial services law, in relation to  establishing
          a working group to create a pilot program for an alternative system to
          a credit score
 
          The  People of the State of New York, represented in Senate and Assem-
        bly, do enact as follows:
 
     1    Section 1. The financial services law  is  amended  by  adding  a  new
     2  section 312 to read as follows:
     3    §  312.  Creditworthiness  alternative  pilot and working group. 1. As
     4  used in this section, the following terms shall have the following mean-
     5  ings:
     6    (a) "Creditworthiness" means a measure of  how  likely  an  individual
     7  will  default on such individual's debt obligations according to a lend-
     8  er's assessment, or how worthy an individual is to receive new credit.
     9    (b) "Credit score" means a number that provides a comparative estimate
    10  of an individual's creditworthiness based on an analysis of  such  indi-
    11  vidual's  credit  report  and is used by lenders to evaluate the risk of
    12  lending money or offering financial services to consumers.
    13    2. The superintendent shall form a working group  to  create  a  pilot
    14  program to develop an alternative credit worthiness program for individ-
    15  uals  who  do  not have a credit score; are unbanked, undocumented immi-
    16  grants, indigent; or who would benefit from such a mechanism. Members of
    17  the working group shall:
    18    (a) be appointed by the superintendent  and  shall  include  represen-
    19  tatives of the financial industry and immigration advocates;
    20    (b)  not  receive  compensation,  but  shall  be  eligible  to receive
    21  reimbursement for expenses subject to the approval of the superintendent
    22  and the division of budget;

         EXPLANATION--Matter in italics (underscored) is new; matter in brackets
                              [ ] is old law to be omitted.
                                                                   LBD03974-01-5

        A. 2692                             2
 
     1    (c) look at models for alternatives to traditional credit  scores  now
     2  being  discussed  and  developed  by the credit card industry in Europe,
     3  among other models such members deem appropriate; and
     4    (d)  be  in  place  within  ninety  days of the effective date of this
     5  section and shall provide the  superintendent,  the  governor,  and  the
     6  legislature  a report containing such working group's recommendations on
     7  how to create a pilot program within two hundred  seventy  days  of  the
     8  effective date of this section.
     9    § 2. This act shall take effect immediately.
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