Utility, Telecommunications, and Rental Data in Underwriting Credit

Report Summary:

Proponents have been arguing for more than 20 years that utility, telecommunications, and rental payment history can expand access to credit among historically underserved consumers without compromising sound underwriting practices or sustainable mortgage finance. Despite efforts to make such data more accessible, however, estimates are that only 2 to 5 percent of consumers who make such payments have that data in their credit bureau files today.

With policymakers, financial services companies, and other stakeholders focusing renewed attention on utility, telecom, and rental payment history, this report examines the history of efforts to tap such data for credit underwriting, empirical research on its effects on the inclusiveness and predictiveness of credit scoring models, recent developments that are both accelerating and complicating UTR initiatives, and key market and policy issues that will determine whether such efforts can reach scale.

While historical experience and current challenges suggest that utility, telecom and rental payment history information is not a panacea, the report concludes that with thoughtful development it has the potential to benefit a considerable number of consumers.

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Webinar: Unlocking Doors: The Promise and Peril of Using Alternative Data in Mortgage Underwriting

Building on their report about UTR data research and initiatives, FinRegLab and the Urban Institute hosted a webinar in April 2022 to examine the current state of play and the evolving policy landscape. Leaders from the field discussed data access and quality and how to build more robust scoring and underwriting models.

Watch Webinar and Learn More

Acknowledgments

FinRegLab’s work on this report was funded by general support from Flourish Ventures, Capital One, and Nyca Partners.

We are grateful to a broad range of stakeholders who participated in interviews and provided constructive feedback that strengthened this report. We thank David Hinson of the Urban Institute for his careful editing and Colin Foos of FinRegLab.

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