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PRBC Continues to Aid Underreported Consumers in Getting Fair Credit Score
By James Comtois
ANNAPOLIS, MD - With the current credit reporting system, a number of consumers that either have no credit history or very little credit history are often underreported and underscored, because most credit bureaus don't consider electric or cable companies creditors.
As a means of mitigating this oversight, Payment Reporting Builds Credit is a national consumer reporting agency and credit bureau that offers potential homebuyers a way to incorporate the steady payment of utility bills, such as electric, phone and cable bills, into their credit scores.
"There are 15 million homeowners with mortgages not reported to credit bureaus. A lot of bills are paid on time that aren't reported," said Michael Nathans, CEO of PRBC. "It's missing from other credit bureaus' databases. They don't consider a landlord or an electric company a creditor. So, sometimes these homeowners are unintentionally underscored by these credit reporting agencies."
Incorporated in March 2002, PRBC collects, stores, scores and reports bill payment data for "permissible purposes" under the Fair Credit Reporting Act, such as monthly utility bills. It gives consumers and small businesses a way to build a credit file to demonstrate creditworthiness without the need to go into debt.
PRBC differs from the "big three" credit bureaus - Equifax, Experian and TransUnion - in that it allows people to enroll themselves. It's also the only bureau that lets individuals demonstrate their fiscal responsibility with information that is not reported to the "big three," such as on-time rental payments and non-debt bill payments.
"We offer an alternative way to get a good price on a mortgage. A lot of brokers don't go through the effort to work with a consumer that doesn't have very high credit. A consumer can [go through our system] independently before they apply for a loan," said Mr. Nathans.
"Consumers with slightly blemished credit can raise their score with as little as one utility tradeline. [Our system] also gives them a score if they have no score or no recent score history."
PRBC produces a PRBC Report and Bill Payment Score that can be used to supplement a consumer's big three credit bureau reports and scores. A PRBC Report and BPS can show that a consumer has paid his or her bills on time for up to the past three years. PRBC maintains the consumer's bill payment history for seven years.
Most recently, PRBC formed an alliance with the Fair Isaac Corp. whereby Fair Isaac delivers PRBC Credit Report with FICO Expansion Score, a credit risk management tool that U.S. mortgage lenders can use when assessing the risk of applicants who have little or no traditional credit history.
The FICO Expansion score is a new credit risk score from Fair Isaac designed to help lenders extend credit to consumers in new markets. Because it is based on nontraditional credit data, it can predict risk for the growing number of U.S. consumers that fail to receive a traditional FICO score due to non-existent or "thin" credit histories.
PRBC Credit Report with FICO Expansion Score combines Fair Isaac's FICO Expansion Score with the underlying, comprehensive credit report, which includes rental and bill payment data from PRBC's repository, non-traditional credit history data from third-party sources and traditional tri-merge credit bureau data when available.
FICO Expansion Score will incorporate all these data elements when calculating the credit risk of individuals who have minimal or no credit history on file. The FICO Expansion score uses non-traditional credit data to create a score that aligns with the FICO credit score used today by most mortgage lenders, using the same 300-850 score range.
Mr. Nathans added that he hopes this new alliance with Fair Isaac will help a lot of potential homebuyers that have undeserved low credit scores. "The way the reporting system works in this country, a lot of people are underreported and underscored, which therefore means they're often overcharged."
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