Markets & EconomyMortgage

Report recommends adding phone, utility payments to credit score information

Policy and Economic Research Council says nonfinancial bill payment behavior enhances risk assessment

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On the heels of Fair Issac Corp. -- the company behind FICO credit scores -- proposing a new credit scoring system, a recent report pushes for a similar structure that would take into account telecommunication and utility payments. Including this data “can enhance risk assessment of consumers who lack a credit history or credit score, as well as those who already have credit or a credit score,” according to Michael Turner, president and CEO of the Policy and Economic Research Council -- a nonprofit policy researcher and author of the report. As it applies to mortgages, the study finds that utility and telecom payment data is predictive of mortgage delinquencies. The report pointed to July 2009 to July 2010, when consumers without a delinquency on their utility/telecom accounts had a 7.5 percent mortgage delinquency rate. “The evidence to date shows that nonfinancial bill payment behavior is associated with credit risk,” the report continues, adding that util...