Rent and Utility Payment Data Improves Credit Ratings of Under-Served Consumers, VantageScore Study Finds | New
STAMFORD, Connecticut – (BUSINESS WIRE) – Dec. 7 2021–
VantageScore Solutions, LLC (VantageScore) today released the new study results who explored adding rent and utility payment data to consumer credit records. The study found that adding this data would improve credit scores, especially for consumers who have little information on their credit reports. Limited credit information is a common trait for underserved consumers, including some African Americans, Latinos, and recent immigrants, even though they regularly pay their rent, gas and electric bills on time.
Although the impact will vary depending on a person’s overall credit profile, the simulated results show that the score increases are greater for consumers who have less recent credit activity or who have limited credit history. For example, consumers who haven’t used credit for 6 months or more might see an 80 point improvement in their VantageScore. While many low-income consumers have limited credit histories, the improved score is also relevant for wealthier consumers who use credit sparingly.
According to the study, consumers with past defaults may also see score improvements by adding rent and utility accounts to their record.
Additionally, consumers who cannot receive a score due to lack of information in their credit reports can now obtain a credit score by adding data from one or more rent or utility accounts. These newly rated consumers can then avoid predatory lenders and potentially qualify for traditional financial products that are often essential to everyday life such as credit cards, buy now, pay later financing, personal loans, and loans. automobiles.
âLenders are re-examining their underwriting processes to make lending decisions more accurate, profitable and inclusive,â said Silvio Tavares, President and CEO of VantageScore. “This research confirms that increasing reporting on rent and utility payments can help.”
The VantageScore study notes that despite the fact that rent is often the biggest monthly expense for millions of Americans, it is not widely reported to the credit bureaus. A collaborative effort, however, is underway to increase coverage and standardization.
The results of the study are detailed in a white paper titled “The Advantage of Adding Rent and Utilities Data to the Credit Report.” Visit https://vss.credit/AlternativeDataWP to download the full analysis.
About VantageScore solutions
VantageScore Solutions develops consumer credit scoring models that combine the need for both financial inclusiveness and reliable predictability across all rating ranges. The company’s latest models score 96 percent of all adults 18 and over – including 37 million more people than conventional models – without sacrificing safety and durability. As a result, lenders using VantageScore can extend credit to those who have been historically marginalized, including minority and lower to middle income Americans. VantageScore credit scores are used by thousands of lenders, landlords, utility companies, telecommunications companies and many more to determine creditworthiness. Additionally, tens of millions of consumers rely on free access to their VantageScore credit scores to monitor their own creditworthiness.
VantageScore Solutions was launched in 2006 and is owned by the three US National Credit Reporting Companies (CRCs) – Equifax, Experian and TransUnion. Using a patent-protected tri-desk methodology, VantageScore offers proven, innovative, and more consistent credit scoring models across all three CRCs.
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CONTACT: Jeff Richardson, VantageScore Solutions
KEYWORD: UNITED STATES NORTH AMERICA CONNECTICUT
INDUSTRY KEYWORD: PROFESSIONAL SERVICES DATA MANAGEMENT SECURITY TECHNOLOGY FINANCE NETWORKS BANKING
SOURCE: VantageScore Solutions
Copyright Business Wire 2021.
PUB: 07/12/2021 10:32 a.m. / DISC: 07/12/2021 10:32 a.m.
Copyright Business Wire 2021.