Experian Designs Program to Help Underbanked Consumers

Information services company ""Experian"":http://www.experian.com/ announced this week that it will incorporate positive rental data into the traditional credit file in an effort to help underbanked consumers build credit.
[IMAGE] According to the ""FDIC"":http://www.fdic.gov/ Web site, ""an estimated 17.9 percent of U.S. households, roughly 21 million, are underbanked. These households have a checking or savings account but rely on alternative financial services. Specifically, underbanked households have used non-bank money orders, non-bank check-cashing services, payday loans, rent-to-own agreements, or pawn shops at least once or twice a year or refund anticipation loans at least once in the past five years.""

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Experian reported that having positive rental history reflected in their credit scores will help consumers who may have faced financial hardships such as foreclosure or bankruptcy rebuild their credit.

""Given that one-third of the U.S. population rents, we felt it was imperative to reflect the true creditworthiness of those individuals who responsibly pay their rent,"" said Brannan Johnston, vice president and managing director of Experian's RentBureau.

According to the company, continuous rental payments can be leveraged by consumers to qualify not only for new leases, but also for other financial products, such as a home mortgage.

Additionally, the company says, lenders can use this development to update their underwriting standards to capture a consumer's rental payment obligations. This will also enable the lenders to have a more complete picture of a consumer's total monthly obligations when determining how much credit to offer.

""Many consumers feel that building credit is an uphill battle, but this approach gives renters credit for managing the payments for the place they call home,"" said Steven Wagner, president of Experian Consumer Information Services.