Alternative Credit Bureaus
Alternative credit bureaus with alternative data outside of Equifax, Experian and Transunion
brings a great many benefits to borrowers and lenders. There is a lot miscellaneous data that is
never tracked for businesses and consumers. Alternative credit bureaus are trying to fill this hole. In fact it is said that there are millions of businesses and consumers who are not part of the
traditional credit bureaus. Fair Isaac Company has completed a study and it estimates that just
reaching 3 percent of this market would enable mortgage lenders to make more than $2.3 billion in loans, $750 million in car loans and $113 million for credit card issuers.
There exists a number of organizations that are trying to put together a cohesive database and scoring system to collect and analyze credit information. Most of this information would fall outside of the traditional credit bureaus. This information would be for gas payments, electric payments, telephone bills, insurance, health care, payday loans, rental furniture information and certain types of retail data. The whole goal is to come up with a cohesive model so that there can be some type of credit modeling based on this information.
The Center for Financial Services Innovation (CFSI) has compiled and listed information on alternative data collection. Here is a list of organizations that are putting together alternative data information.
- Community Financial Services Association of America, the largest association of payday
loan companies, is offering its customers the opportunity to have their repayment data reported to
credit bureaus as part of a pilot project in select geographies.
- Fair Isaac Company has come up with the FICO Expansion Score, which uses historical
data on utility, insurance and other payments, in combination with information from loan
applications, to find a credit score and to either approve or reject a loan application.
- First American Corporation is marketing the Anthem (Assisting Nontraditional
Homebuyers in Emerging Markets) report, which takes into account payment histories for rent,
insurance, utility bills, and childcare expenses as well as traditional credit data to generate a
credit report and score.
- Lexis-Nexis's RiskView uses more than 300 public record attributes, such as employment,
previous addresses, and property and asset ownership, to verify consumers' identities and predict
- Link2Credit is a "credit decisioning platform" for wireless telecommunications carriers
that uses historical phone payment records and other alternative data sources. Link2Credit is
starting to work with credit card companies and the mortgage industry.
- eFunds DebitBureau uses consumers' checking account histories as a basis for data about
- Payment Reporting Builds Credit (PRBC) is a new credit bureau that tracks rental
payments, telephone payments, utility payments and other third party payments. PRBC is trying
to establish themselves as the fourth credit bureau.
In the future database scoring and reporting will continue to grow. The consumer will have to do
their best to stay on top of what and where their information is being reported, either for the good
or for the bad.
This article was written by Charles White of Corporate Credit Builders, Portland, Oregon. He is one of the top small business credit specialist in the US with years of experience in consulting small businesses.