Millions of people stand to benefit from a credit rating boost because
information about their regular household bills is now being included in
their credit reports. This follows a drive by Experian over the past
six years to widen people’s access to credit and other essential
services by helping bill payers present themselves in the best possible
light. This is being achieved by working with lenders outside of the
traditional banking sector to strengthen people’s financial profiles.
Millions are seeing their credit reports strengthened as a result of the initiative, which underlines the value of paying regular bills on time. Lenders use credit reports to help decide which customers to accept and turn down, and sometimes, for successful customers, to decide how much to lend and at what interest rates. So a strong, positive credit history can help people get quick and easy access to competitive credit deals, widening access to everyday services.
Since 2009, millions more records have been added to Experian credit reports from providers of gas, electricity, water and fixed communications services. Now, these utilities agreements make up more than 1 in 8 credit accounts on Experian reports, a figure that is growing all the time as a result of this ongoing programme.
Andy Wills, Data Director at Experian Consumer Information Services, comments: “This is a huge boost for people who have traditionally struggled to demonstrate their creditworthiness, perhaps because they are non-credit users, and have faced financial exclusion as a result. Lenders rely on credit reports to evidence a customer’s borrowing track record and current commitments, so it’s essential we work with a wide range of creditors to help give people every opportunity to build a strong, comprehensive credit history. This not only helps lenders extend and manage credit responsibly but it helps many more people access affordable credit.”
Experian’s credit-data-sharing scheme ‘CAIS’ recently celebrated its 30th birthday and has grown to become a leading and trusted source of consumer credit information. Lenders can access this information, with a customer’s agreement, to augment the information provided on credit application forms and help them make informed assessments of creditworthiness and affordability.
Andy Wills added: “Through our ongoing work with utilities providers, we are making great progress towards giving lenders a 360-degree view of their customers’ financial circumstances. This is complemented by the Experian Rental Exchange, a joint initiative with Big Issue Invest, where we are encouraging landlords to boost their tenants’ credit profiles by submitting data about their regular rent payments. Together, these schemes are really helping everyone present themselves in the best possible light.”
Improved access to online goods and services
A wide range of organisations now use credit-report-driven services to undertake online identity checks, quickly verifying a customer’s name and address using their digital footprint without the need for cumbersome exchanges of paperwork. As a result, stronger credit reports mean quicker and easier access to an array of online products and services for people, including financial products, online retail and public services.
Some groups of the population have traditionally struggled to satisfy these checks and have missed out as a result. For example, according to the Social Housing Tenants study, 61 per cent of tenants did not have enough credit history to enable online financial services providers to verify their identities electronically.
Experian’s top tips on building a great credit rating:
• Use some credit accounts on a regular basis, but never borrow more than you can afford.
• Stay within the agreed credit limits and always make your repayments on time, paying more than the minimum off your credit cards each month if you can.
• Space out your credit applications and avoid making several applications close together as this can signal financial stress.
• Make sure you register to vote at your current address - lenders use the electoral register to confirm who you are and where you live.
• Get into the habit of reviewing your credit report on a regular basis, paying particular attention to the following:
o Make sure everything is accurate and up to date.
o Review financial links to other people and ask for any out-of-date links (e.g. to an ex-partner) to be broken.
o Explain any missed payments by adding a "notice of correction" – a statement of up to 200 words – if there was a good reason, such as losing your job.
o Avoid ‘maxing out’ your revolving credit accounts such as cards. Maintaining low balances and closing accounts you no longer use can help credit scores.
o Credit scoring can also look at the average age of your credit accounts, so try to build some longstanding relationships.
(Source - Experian News Release)