Dear Creditnet: I just read Creditnet's article about the credit bureau, PRBC, and it sounds like a great thing...long overdue. My question is, when applying for a loan or credit cards, do most (or any) lenders check with PRBC along with the 3 major credit bureaus?
Also, does the PRBC report information to any of the big 3, and if not, can we request that they do so?
Answer: Since the PRBC, which now stands for "Payment Reporting Builds Credit", is another credit reporting agency, they don't actually report any information to the other big 3 credit bureaus- Equifax, Experian, and TU. What the PRBC is doing is independently verifying "nontraditional" payment data, such as rent and cell phone bills, and then providing this information in their own separate credit report that lenders can use to supplement the underwriting process when applicants have otherwise "thin" credit reports.
The PRBC does, however, have a partnership with FICO to generate a credit score called the Expansion Score. This is in addition to the 3 FICO scores that are generated from your Experian, TransUnion and Equifax credit reports. Because this new credit score uses alternative data sources, the FICO Expansion score is intended to help lenders better assess the credit risk of consumers who typically would never have access to credit due to their limited credit histories.
The point is that you may have never made a mortgage payment before, but you may have also have been paying your rent on time for 15 years. So why shouldn't those payments be taken into consideration by a lender? Makes sense, right?
Unfortunately, most lenders still do not look at PRBC credit reports or FICO expansion scores when assessing your risk as a borrower. Remember, these are relatively new credit reports and scores, and lenders are notorious for being slow to adapt or change their traditional credit-granting processes. The PRBC's partnership with FICO is sure to help legitimize their place in the marketplace though. It will take some time, but I fully expect that more lenders will utilize the PRBC in their underwriting processes as they seek greater access to a huge group of borrowers that have been largely cut off from credit in recent years.
Of course, it never hurts to ask your lender up front if they will consider utilizing the PRBC. If you take the time to explain your situation and make it clear that your traditional credit history is limited because you've chosen to always avoid credit cards or auto loans over the years, some lenders may already be willing to look at your PRBC report and FICO Expansion score in addition to your regular FICO scores from the big 3.
