Data and Analytics

How Financial Inclusive Lending Data is Impacting the Mortgage Industry

How Financial Inclusive Lending Data is Impacting the Mortgage Industry

April 05, 2023 | Nikole Thompson

With the exciting news of telco, pay tv, and utility insights available to be delivered with every mortgage credit report here at Equifax, Craig Crabtree, Senior Vice President and General Manager for Mortgage and Housing recently sat down with Rob Chrisman of Chrisman Commentary. Crabtree discussed financially inclusive lending and how differentiated data sets can potentially help the mortgage industry. Below is a synopsis of the interview. For more on our telco, pay tv, and utility data, check it out on our site, here

What does financially inclusive lending mean and why is it important?

Craig Crabtree: Traditional credit reports remain a strong indicator of credit history and past financial reliability. Younger consumers, and those building credits have thin files, or no credit file. That makes them unscorable. Providing expanded insights to mortgage lenders by including differentiating data assets along with the traditional credit reports helps broaden visibility into consumers credit worthiness. Providing greater access to credit and helping open doors to homeownership is a huge focus for Equifax. 

Equifax recently announced the availability of the expanded mortgage credit report. Can you talk about what that is and how that's helping support more inclusive lending?

Craig Crabtree: Equifax is the first National Credit reporting agency or NCRA to help make certain telecommunication or telco pay TV and utility attributes available to the mortgage industry. We are providing a fuller picture of a consumer's financial profile, enabling more than 191 million consumers. 80% of whom have traditional credit files, but may benefit from these additional insights along with their traditional credit file into their financial profile. This will allow greater opportunities for home ownership and we know that home ownership is the foundational step to achieving the American dream and  creating that generational. 

How is the new telco, pay TV, and utility data impacting lenders and consumers?

Craig Crabtree: We have done a couple internal studies and then most recently Andrew Davidson and Company came out with a study on the data. Andrew Davidson has been an industry leader for the last 30 years. Andy and team provide risk, analytics, and consulting for residential loans and mortgage-backed securities. They are one of the forefront teams that really does that work for the industry. They analyzed US mortgages from January 2019 for consumers with non-traditional credit histories, think young thin file or no hit, and found a strong correlation between positive consumer, utility payment history and the future positive mortgage payment performance. The firm's research confirmed this correlation across a wide range of credit scores and notably in two buckets, the high end of subprime. That being said, credit scores that are in the 580 to 619 range are in the high end of subprime through the lower side of prime. Credit scores 660 to 719 might face more challenges and obtaining a mortgage. This is why there is a correlation between positive payment history in the telco data to future performance. 

Having this data available to be delivered every single time with the credit file, allows that ability to analyze the data in a much more efficient way. So again, those insights are available to be delivered along with the credit file, will be in front of that process or underwire to do that assessment. This data will be used for utilizing any other traditional loan.

What is the differentiated data set?

Craig Crabtree: A differentiated data set is one that's not in a traditional credit file, right? Most consumers have at least one utility bill or cell phone in their name. And, that data is not in the traditional credit file from any of the three bureaus and utility data is widespread in a powerful indicator. Especially as people are really starting their credit journey, utilities won. The first thing that they do right is really creating a great performance history. So the report that I'm talking about will be delivered along with the credit data and it supports that assessing of credit risk around the financial ability for the consumer to make their monthly payments.

What is Equifax doing to support financial inclusivity?

Craig Crabtree: We are laser focused around all day assets that help give the best picture around risk assessment, in all the industries that we support to allow and open up doors for consumers to unlock their financial dreams. We're making sure we're able to bring these insights in a very economical way to all the industries that we support. That way they can make the best decisions from a risk assessment and open up the maximum amount of support for consumers.

For more on our telco, pay tv and utilities data, click here.

Nikole Thompson

Nikole Thompson

Portfolio Marketing, Mortgage & Housing

Nikole Thompson is a Portfolio Marketer for Mortgage & Housing at Equifax. She has spent her career in the Financial Services Industry, with background in Banking and Lending, and Alternative Credit Data gaining expertise in digital marketing, alternative data, and fintech. While marketing is her primary job function b[...]