Experian to add rent data to their credit reports

Experian, one of the three national credit reporting agencies, will add rental data to their credit reporting database.  This is a decision that could benefit millions of renters, if you’re lucky enough to be one of the select few.  According to this ABC News report only a few million renters will see their rental payment history show up on their Experian credit files.  And, at this point only positive rental information will be added, according to the credit bureau.

The question is how will this information impact your FICO credit scores?  Normally a positive trade account could have a positive impact on your scores.  However, according to the Minneapolis based credit scoring giant, the newly added information will not be considered until they can get a better understanding of its predictive value.

In a statement released by FICO regarding Experian’s new data, “FICO is looking forward to receiving a sample of this expanded data set from Experian so we can evaluate the predictive value of rental data in Experian’s consumer credit reports. Our approach has always been to let the data tell the story, so it’s too early to predict what effect the availability of this data might have on consumers’ FICO credit scores.”

The way this will work, I believe, is if the data is predictive of elevated (or reduced) credit risk then it will likely be considered in future version of their scoring systems.  If, however, it does not add any incremental value to the data already being used from the Experian credit file then it may not be considered.  Only time will tell.

The good news is that it signals a willingness on Experian’s part to consider adding what is considered non-traditional data to their credit file database.  Who knows, maybe we’ll start seeing utility payments and cell phone payments soon.

John Ulzheimer is the President of Consumer Education at SmartCredit.com, the credit contributor for Mint.com, and the author of the “credit rating” definition on Wikipedia.  He is an expert on credit reporting, credit scoring and identity theft. Formerly of FICO, Equifax and Credit.com, John is the only recognized credit expert who actually comes from the credit industry.  He has served as a credit expert witness in more than 70 cases and has been qualified to testify in both Federal and State court on the topic of consumer credit.

Categorised in: Credit Report, Credit Score, Getting Credit, Improving Credit

This post was written by John Ulzheimer