Consumer watchdogs and financial counselors have told us for years that we need to take out a loan to acquire and improve a credit rating. In 2012, however, more and more companies are reporting to consumer credit bureaus to give customers extra “motivation” to pay their bills on time. While new sources of credit history can be a good thing, more reporters could harm your credit rating too.
Most utility providers do not and cannot report payment histories to the national credit bureaus because state privacy laws usually prevent companies from doing so. In some states, such as Minnesota, utility providers often report payment histories to the credit reporting agencies. In addition, there is some momentum gathering to allow utility providers to report payment so consumer can build credit.
Just like with utility providers, cellphone companies often cannot report to the credit bureaus because of privacy concerns. In addition, many cellphone providers do not consider cellphone service a “true” loan, so it should not serve to predict your borrowing habits. Some companies, however, such as Verizon, now report late and on-time payments to the national credit bureaus, but mostly because the cellphone provider wants to punish slow payers. In the cellphone industry, consumers often pay their bills late because of a lack impact on their credit scores.
Of all the accounts that go unreported, the national credit bureaus tend to want rental histories the most, because there is a high correlation between a willingness to repay a debt and awillingness to pay rent. The problem, however, is that landlords often do not have the resources to report rental history to the credit agencies. In addition, the national credit bureaus usually take rental history from creditors with thousands of accounts, while landlords often only have a few hundred or just a few doze.
Experian – one of three major credit bureaus in the US – acquired a company in 2010 called RentBureau that collects rental histories from landlords. Starting in 2012, consumers should regularly see rental histories on their Experian credit reports because RentBureau has data on millions of renters. The other big credit bureaus – TransUnion and Equifax – do not share information with Experian, so consumers probably won’t see rental histories on their credit reports from these agencies, but TransUnion and Equifax should eventually acquire this data.
Utility providers and any creditor to whom you owe money have always been able to report your delinquent accounts to the credit bureaus by proxy through debt collectors. Collection agencies compile lists of account and frequently send them to the credit rating bureaus.
If you are concerned about whether a utility provider or landlord reports your payment history, you can simply ask them about their reporting policies.