In April, the Wall Street Journal reported that soon consumer FICO credit scores will reflect payment history on utilities, cell phone accounts, and cable bills. How often someone moves will also be a factor in their FICO credit score.
It is unclear at this point how many consumers have already seen a change in their FICO credit score as a result of FICO working with 12 credit card issuers to test the new scoring model in lending decisions. The new scoring model is slated to be used nationwide by the end of 2015 providing a credit history for 53 million more consumers that currently don’t have one.
It is also unclear how this may affect consumer FICO credit scores. It may help those people with little or no credit history to establish one. It may also help those with an established credit history to bolster their score if they have an on time payment history in these areas. Currently, the only time payment history for utilities, cell phones or cable bills is reported is when there is negative information such as delinquent or unpaid amounts.
The new FICO credit score model will also report on how many times a consumer changes addresses. Frequent changes of address may lead to a creditor deciding that someone is unstable financially.
This represents an opportunity for the credit reporting agencies (Experian, Equifax & Transunion) to grow their business. Bringing into the fold 53 million more consumers will mean more data being submitted by creditors, more credit reports being pulled, and more consumer FICO credit score data being purchased by companies for marketing purposes. All of which generate revenue for the 3 agencies. It also means that companies will now have more data on more consumers allowing them to expand marketing efforts to these consumers.
These changes reflect a major change in the existing FICO credit score model. How much it will affect existing consumer credit scores and how many more consumers will now have access to credit remains to be seen.
For more information on applying rental history to your credit report, visit www.ERACreditServices.com or call 619-492-3040.