STAMFORD, Conn.--(BUSINESS WIRE)--VantageScore Solutions, LLC (VantageScore) today released the results of a new study that explored adding rent and utility payment data to consumer credit files. The study revealed that the addition of this data would improve credit scores, especially for consumers who have limited information in their credit files. Limited credit information is a common trait for underserved consumers including some African Americans, Latinos and recent immigrants, even though they consistently pay rent, gas and electric bills on time.
While impact will vary depending on a person’s overall credit profile, simulated results show that score increases are greatest for consumers who have less recent credit activity or who have limited credit histories. For example, consumers that have not used credit for 6 months or more could see as much as an 80 point improvement to their VantageScore. While many lower income consumers have limited credit history, the score improvement is also relevant to wealthier consumers who use credit sparingly.
Consumers with prior delinquencies also could see score improvements from adding rent and utility accounts to their file, according to the study.
Additionally, consumers who are unable to receive a score due to the lack of information in their credit files can now obtain a credit score by adding data from one or more rent or utility accounts. These newly scoreable consumers can then avoid predatory lenders and potentially qualify for mainstream financial products that are often critical to everyday life like credit cards, “buy now, pay later” financing, personal loans and auto loans.
“Lenders are reexamining their underwriting processes to make lending decisions more precise, profitable and inclusive,” said Silvio Tavares, President & CEO of VantageScore. “This research confirms that increased reporting of rent and utility payments can help.”
The VantageScore study notes that despite the fact that rent is often the largest 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 whitepaper titled, “The Advantage of Adding Rent and Utility Data to the Credit File.” 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 inclusivity and dependable predictiveness across all scoring ranges. The company’s most recent models score 96 percent of all adults 18 and older – including 37 million more people than conventional models – without sacrificing safety and soundness. 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, telecom companies, and many others 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 America’s three national credit reporting companies (CRCs) – Equifax, Experian, and TransUnion. Using a patent-protected tri-bureau methodology, VantageScore delivers time-tested, innovative and more consistent credit scoring models across all three CRCs.