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Dear Dr. Don,
I am presently paying rent and bills like phone,
cable, auto, etc. How can I translate those payments
into credit scoring? I want to improve my credit
by using these everyday bill payments, but they
are not reported to the three credit bureaus.
-- Pascal Payment
Dear Pascal,
Your problem is a common one. The big three consumer reporting agencies -- Equifax, Experian and TransUnion --
currently don't track the payment history on rent, cable or phone bills.
Payment Reporting Builds Credit,
a relatively new consumer reporting agency created
in 2002, allows consumers to register and have
these payment histories verified. The verified
payment history can be used by creditors in the
loan application decision.
Through PRBC, you can order a PRBC report and a bill payment score that can cover your payment
history for up to three years. PRBC maintains that history for seven years.
PRBC has allied with Fair Isaac Corp. in this area. Fair Isaac markets the FICO Expansion Score
designed to evaluate the credit risk of applicants who have no credit history or a limited history. The partnership
combines the PRBC credit report with the FICO Expansion Score and provides lenders with a tool to evaluate the
credit risk of a loan applicant without much of a traditional credit history.
That brings up an important point: The lender has to be willing to use these tools in making the
loan decision. You'll need to find a lender in your market that uses the FICO Expansion Score in making credit
decisions.
For an interesting discussion of
the issue, read the Bankrate feature, "Interview:
Craig Watts" on the future of credit scoring.
Watts is the public affairs manager at Fair Isaac.
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