The idea of supporting financially inclusive lending through expanded mortgage credit reports is gaining traction as credit bureau Equifax has endorsed the idea which adds monthly telecommunications bills, cable/satellite TV subscriptions, and utility payments to present a better picture of the potential risk of the borrower.
According to Equifax, this could enable more than 191 million consumers (80 million of which have a current, traditional credit file) to qualify for housing from a lender.
Their research further revealed that adding these data points to traditional credit files could help 30% of the 255 million U.S. consumers by improving their score, thus increasing their access to credit. 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.
“Our company purpose is to help people live their financial best,” said Mark W. Begor, CEO of Equifax. “Equifax understands that a single financial opportunity can be a critical step to establishing individual financial health and generational wealth, changing the trajectory of families and communities for generations. More data drives better decisions, and we have invested billions into cloud-based technology solutions and powerful differentiated data sources that give new visibility to underserved individuals, empowering our customers to bring greater access to financial opportunity to more people.”
“Our research has confirmed strong analytical support for the use of utility attributes in assessing potential mortgage risk,” said Andrew Davidson, President of Andrew Davidson & Co. “We identified encouraging performance data in our research that shows a strong correlation between past favorable utility payment history and future mortgage performance. It’s even more pronounced when multiple utility attributes are considered. Such impacts have the potential to increase access to mortgages for underserved groups. Utility attributes also have the potential to streamline the underwriting process and help more consumers secure loans by contributing to a more complete financial profile.”