Will Reporting Rent Payments Help Working Poor?

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A few years ago, I wrote about a new formula for credit scores that includes rent payments. Some like the idea as now renters will a history of 0n-time payments will have their scores increased by continuing to do what they’ve been doing. Some dislike the idea because some renters could be hurt by reporting not-so-on-time payments.

The Credit Builders Alliance (CBA) has done a study to provide more insight.

  • 79% of participants experienced¬† an increase in their credit scores
  • Average scores¬† increased by 23 points
  • Participants that were previously “credit invisible” had a credit file created.

To read more about the study click here.

Should Utilities Be Included in Credit Scores?

In Sunday’s LA Times “Changes weighed that may boost credit scores” talks about a recent hearing before the House Financial Services Committee headed up by Los Angeles Representative Maxine Waters. Due to the recession many Americans that had favorable credit scores have seen their scores decline due to job loss and stagnant pay. Water is advocating for negative things to fall off of one’s credit report in 4 years instead of the 7 years that it is currently and for the inclusion of so-called “alternative credit data” such as rent payments and utility bills (water, power, cable, etc,).

Many think that including these payments will help people increase their credit scores because they will be recognized for paying these bills every month. Others think that it might make things worse because many people prioritize payments and when money is tight choose to pay their rent and wait to pay their utilities that would trigger 30-day-late and possibly 60-day-late marks on credit reports thereby lowering scores.

What do you think? Would you like to see alternative credit data included in credit reports?