Equifax is now offering additional insight into consumer credit by including certain telecommunications (telco), pay TV and utilities attributes available to the mortgage industry. The company says this will help create greater home ownership opportunities for more than 191 million American consumers, 80 percent of whom have traditional credit files but may benefit from additional insights into their financial profile.
“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,” said Mark W. Begor, CEO of Equifax. “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.”
Anonymized Equifax research into the potential benefits of telco, pay TV and utilities attributes found that among 255 million U.S. consumers, 30 percent could potentially increase their traditional credit score if the attributes are included – helping to increase 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, the company said.
The company cited a recent study by Andrew Davidson & Co., a provider of risk analytics and consulting for residential loans, Agency Mortgage-Backed Securities (“MBS”), and credit-sensitive securitizations, which analyzed U.S. mortgages from January 2019 for consumers with non-traditional credit histories (young, thin, or no-hit), and found a strong correlation between positive consumer utility payment history and future positive mortgage payment performance.
The firm’s research also confirmed this correlation across a wide range of credit scores for these borrowers, most notably among borrowers from the high-end of subprime (credit scores of 580-619) through lower prime (credit scores of 660-719) score bands who may have been more likely to face challenges in obtaining a mortgage or who may have been offered higher rates based on their credit files alone.
“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.”
The additional insights are delivered alongside Equifax mortgage credit reports at no additional cost to lenders, which the company says will help them simplify the manual underwriting process, improve the customer experience and reduce lender costs while enhancing the borrower experience.