COSTA MESA, Calif.–CU members who have been making their cellphone payments on time may soon qualify for higher loan limits and other credit increases.
Consumer cellphone and utility payments are about to be added to credit reports from Experian, a move expected to boost the credit scores of millions of people.
Experian said it will begin factoring in cellphone and utility payment history information in early 2019. It will be the first time U.S. consumers will be able to provide this data for their credit reports.
The move will “likely increase credit scores for consumers who have low or no scores because they have a limited history of borrowing from banks and other mainstream lenders. The move could also help subprime borrowers whose scores are currently lower than what some lenders require,” noted the Wall Street Journal in its analysis.
The inclusion of the new data is being brought about as the result of a mix of regulatory pressure and requests from banks and other lenders that want to make more loans to a wider swath of customers, the Journal reported.
‘Room to Run’
“While most large banks have limited appetite for the subprime borrowers, they lent to in the runup to the financial crisis, some have been eyeing customers with thin borrowing histories as a new revenue stream, a sign the lenders believe the good economy still has room to run,” the Journal stated.
According to Experian CEO Brian Cassin, the company was approached by large banks that are looking for data to evaluate the risk of consumers with little to no borrowing histories, so-called “thin files,” a group of consumers/members credit unions have also sought to find ways wo work with.
The Journal reported the new free service, called Experian Boost, will be used by consumers who opt in and link the bank accounts they use to pay their phone and utility providers to Experian, allowing the company to track their monthly payments. Boost will also factor in landline-phone and cable-TV accounts. It won’t track missed payments.
New FICO Developments
In addition, Fair Isaac Corp., creator of the FICO credit score will soon launch a new credit score in partnership with Experian that will factor in consumers’ history managing their checking and savings accounts, which will give a boost to most consumers who keep at least several hundred dollars in their accounts and don’t overdraw, the Journal added.
All three major credit reporting firms—Experian, Equifax and TransUnion have also been removing negative information such as tax liens and judgments from consumers’ credit reports, in large part to appease regulators, the Journal added.