Consumers, Creditors See Benefits to Alternative Data Featured

By Radiance Cooper May 29, 2018

For many individuals, gaining credit can be a tricky process. Many consumers face barriers when accessing credit and sometimes pay more for credit for many reasons, including having no credit history or having a credit file that’s too “thin.”

Experian is one many companies that sees alternative data as the solution to this problem. The company recently release its first ever State of Alternative Credit report.

"While we are best known for the traditional credit scores we provide, we recognize that a score is a mere snapshot in time," said Alex Lintner, Experian’s president of consumer information services.

Lintner said Experian believes everyone deserves access to quality credit. When you give creditors the opportunity to layer on additional sources of data such as trended data to items like rent and utility payment history, suddenly a much more comprehensive picture of the consumer emerges, she said,

Both consumers and creditors see benefits to expanding the credit data available.

The study found that 80 percent of creditors rely on a credit report plus additional information when making a credit decision.

More than 50 percent of consumers believe that including items like their utility or phone payment history would have a positive effect on their credit score.

However, despite this, there are some barriers to using alternative credit data. These include regulatory barriers at the state and local level that deter utility and telecommunications companies from furnishing on-time payment data to credit bureaus.

In order to help address this problem, Congress is considering bipartisan legislation called the Credit Access and Inclusion Act. This could amend the Fair Credit Reporting Act to clarify that utility and telecommunications companies may report credit data such as on-time payments.

The legislation passed the House of Representatives on Feb. 27 and is currently being debated in the Senate.

Last modified on Thursday, 31 May 2018 18:22