“Do FICO Scores Consider Telco and Utility Data?” asks the FICO blog. Joanne Gaskin, Vice President of Scores and Analytics at FICO, then answers:
The unequivocal answer is yes! FICO® Scores have always considered telco and utility payment data that is furnished to the three nationwide U.S. credit bureaus: Equifax, Experian and TransUnion. The inclusion of telco and utility payment information dates back to the release of the very first FICO Scores in 1989.
Honestly, I was surprised when I read this. I did not realize that FICO provided models that integrated payments for utilities and telecom. And have been doing so since the beginning. As the FICO blog later notes, “over 60% of American adults pay for utilities such as gas, electricity and water, but just 2.4% of consumer credit bureau files contain utility (non-telco) payment information.”
Enter the new crop of credit-building products. Here are three ways in which consumers can add utilities and telco payments to their credit reports:
Good news! Finally consumers can get those utility and telco payments into their credit reports. But there’s a hitch. Not all credit bureaus accept those payments into a consumer’s credit profile.
Credit Bureaus: the data gatekeepers
FICO’s point about their models accepting utility/telco payments is true as far as it goes. But FICO doesn’t say which data is accepted for a consumer’s credit record. That’s the role of the three credit bureaus: Equifax, Experian, TransUnion. If they decide to accept utility/telco payment data, there’s a FICO model ready to accept it.
Credit bureaus’ brands are built on trust and reliability. Creditors depend on them to ensure the integrity of data and scores, to protect their credit portfolios. That’s why a recent mistake made by Equifax was such news:
Millions of Americans were affected by Equifax’s error, with some scores changing by as much as 20 points in either direction — enough for some prospective borrowers to be rejected for a loan.
A bureau’s reputation is directly tied to their usage in the market. Generally, there is parity of market share for the bureaus. None want to be known as a firm that makes mistakes, and risk falling behind its peers.
So there is understandable conservatism in adding new data that can be used in a consumer’s credit score. Great care must be applied to each data source.
Utility & telco payments: who is actually accepting?
The table below shows the bureaus accepting utility/telco payments for the three credit building products mentioned earlier.
| Equifax | Experian | TransUnion | |
| eCredable | √ | ||
| LevelCredit | √ | ||
| Experian Boost | √ |
Let’s run through the three bureaus in detail.
Equifax: Equifax thus far has kept away from accepting utility/telco from these providers. My guess is that the payments lack sufficient history for Equifax to include at this time. This is a policy decision, seemingly one that can updated as some point in the future. But it does mean Equifax-generated credit scores won’t get the benefit of on-time utility payments.
Experian: The good news is that Experian is accepting utility/telco payments to generate a credit score. They do so via their proprietary product, Experian Boost. The bad news is…they only accept utility/telco payment via Boost. Thus far, eCredable and LevelCredit have been shut out. In a competitive market, this is not surprising. Experian would like to grow the use of Boost. Accepting data from eCredable and LevelCredit elevates them, and reduces the motive for signing up for Boost.
Of note though. LevelCredit also reports rent payments. THOSE payments are accepted by Experian. LevelCredit has an existing relationship to report non-credit recurring payments with Experian. But utility/telco aren’t part of that.
TransUnion: eCredable and LevelCredit do report utility/telco payments to TransUnion. TransUnion made the decision to provide scores using that data, when it’s available. Creditworthy consumers get the benefit of this decision. The promise of FICO’s models incorporating utility/telco payments realized.
But note one product doesn’t make its way to TransUnion: Experian Boost. Surely it’s obvious to the reader why. TransUnion is a competing bureau, and Experian wants to bolster its product by maintaining exclusive access to the utility/telco payments. Unfortunately, this reduces the value of Boost for the consumer, as the other bureau that accept these payments doesn’t see them.
Broader coverage of all eligible payments benefits consumers. As you can see here, it’s still incomplete for utility/telco payments. Can this balkanized situation hold? Given that the credit report industry is an oligopoly, it does seem the status quo could hold for a while. But long term, the trend clearly favors expanding the data included in risk assessment. Watch this space.
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