ATLANTA—Saying it is seeking to support financially inclusive mortgage lending, Equifax said it has become the first national credit reporting agency to make certain telecommunications, pay TV and utilities attributes available to mortgage lenders to “provide a fuller picture of consumers' financial profiles.”
According to Equifax, the move could potentially enable more than 191-million American consumers, 80% of whom it said have traditional credit files but may benefit from additional insights into their financial profile, to have greater opportunities for homeownership.
“Anonymized Equifax research into the potential benefits of telco, pay TV and utilities attributes found that among 255 million U.S. consumers, 30% could potentially increase their traditional credit score if the attributes are included - helping to increase access to credit,” the company said. “Millions of subprime consumers could also see an average increase of approximately 30 points from use of the additional data, moving them into the near-prime score band and potentially enabling them to receive more favorable offers or rates.”
Equifax said the majority of U.S. adults have at least one utility bill or cell phone in their name, making utility data a widespread and “powerful indicator of past financial reliability.”
Research Study Cited
The company cited a recent study by Andrew Davidson & Co., a provider of risk analytics and consulting for residential loans, which analyzed U.S. mortgages from January 2019 for consumers with non-traditional credit histories (young, thin, or no-hit), and found a strong correlation between positive consumer utility payment history and future positive mortgage payment performance.
The firm's research also confirmed this correlation across a wide range of credit scores for these borrowers, most notably among borrowers from the high-end of subprime (credit scores of 580-619) through lower prime (credit scores of 660-719) score bands who may have been more likely to face challenges in obtaining a mortgage or who may have been offered higher rates based on their credit files alone, Equifax added.
No Extra Cost
Equifax said that for mortgage lenders the ability to consider telco, pay TV and utilities insights in addition to the traditional credit report supports financially inclusive lending, helping to expand the availability of credit to more borrowers.
The company said the additional insights will be delivered alongside Equifax mortgage credit reports at no additional cost to lenders.
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