Data & Analytics

This is the second in a three-part interview between Experian’s Tom Whitfield and Dr. Michael Turner, founder, president and CEO of the Policy and Economic Research Council (PERC)—a non-partisan, non-profit policy institute devoted to research, public education, and outreach on public and economic policy matters. Dr. Turner is a prominent expert on credit access, credit reporting and scoring, information policy, and economic development. Mr. Whitfield is the Director of Marketing for Experian’s Telecommunications, Energy and Cable practice. In this post Dr. Turner explains how full-file credit reporting actually benefits consumers and why many communications providers haven’t yet embraced it. _____________________________ Why is full-file credit reporting good for communications customers? Approximately 54 million Americans either have no credit report, or have very little information in their credit reports to generate a credit score. Most of these “thin-file/no-file” persons are financially excluded and many of them are media and communications customers. By having their payment data fully reported to a credit bureau and included in their credit reports, many will be able to access affordable sources of mainstream credit for the first time; others will be helped by repairing their damaged credit. In this way, consumers will save by not relying on high-cost lenders to have their credit needs met. Why don’t providers embrace reporting like other major industries/lenders? A major reason is inertia—providers haven’t done it before and are not sure how they would benefit from change. Just recently, PERC released a major study highlighting the business case for fully reporting customer payment data to one or more nationwide credit bureaus. This includes customer survey results, peer survey results and case studies. The results all point to tremendous upside from fully reporting payment data, with only manageable downsides—including external communications and regulators.   Misperceptions and misunderstandings Another significant reason is regulator misperceptions and misunderstandings. State public service and public utility commissions (PSCs and PUCs) aren’t experts in credit reporting or the regulatory framework around credit-information sharing. Many mistakenly believe the data is unregulated and can be used for marketing. Not wanting to contribute to an increase in commercial mail and telemarketing calls, some regulators have a knee-jerk reaction when the topic of credit reporting is raised by an interested media, communications or utility company. PERC has been working to educate regulators and has had success in their outreach efforts. PERC can be a resource to firms interested in full-file reporting in direct communications with regulators. Part 3: Wednesday, June 29 Next, in the concluding post of this interview with PERC founder, president and CEO Dr. Michael Turner, the doctor discusses mandatory credit-information sharing for communications companies, and the value of engaging and educating state regulators. Agree, disagree or comment Whether you agree with Dr. Turner’s assertions or not, we’d love to hear from you. So please, take a moment to share your thoughts about full-file credit reporting in the communications industry.

This is the first in a three-part interview between Experian’s Tom Whitfield and Dr. Michael Turner, founder, president and CEO of the Policy and Economic Research Council (PERC)—a non-partisan, non-profit policy institute devoted to research, public education, and outreach on public and economic policy matters. Dr. Turner is a prominent expert on credit access, credit reporting and scoring, information policy, and economic development. Mr. Whitfield is the Director of Marketing for Experian’s Telecommunications, Energy and Cable practice. In this post Dr. Turner discusses how communications providers and their customers can both benefit from full-file credit reporting. Comments, suggestions and differing viewpoints are welcome.   _____________________________ Why is full reporting to the bureaus so critical for communication providers? PERC’s research has found at least three good business reasons for media and communications companies to consider this practice: 1) Improved cash flow. In a survey of nearly 1,000 heads of household (those with primary bill paying responsibility), media and communications payments ranked below payments that were fully reported to credit bureaus. When asked how credit reporting would impact bill payment prioritization, half of all respondents indicated they would be “much more likely” or “more likely” to pay their media and communications bills on time. Such an outcome would represent a significant cash flow improvement. In fact, case study results substantiate this, and demonstrate further benefits from reduced delinquencies and charge offs. 2) Cost savings. In a survey of media, communications, and utilities the perceived costs of reporting payments to a bureau were, in fact, substantially greater than actual costs incurred, and perceived benefits significantly lower than actual benefits. In most cases, the actual benefits reported by firms fully reporting payment data to one or more nationwide credit bureaus were multiples higher than the actual costs, which were reported as being modest as a ratio of IT and customer service expenditures. 3) More customer loyalty, less churn. In a competitive deregulated environment, telling customers about the benefits of fully reporting payment data (building a good credit history, reducing costs of credit and insurance, increasing credit access and credit limits, improving chances of qualifying for an apartment rental or job) could result in increased loyalty and less churn. How do providers stand to benefit from reporting? Providers benefit because fully reporting payment data to a nationwide credit bureau for inclusion in credit reports actually changes customer behavior. Reporting negative-only data doesn’t affect customers in the same way, and, in the vast majority of cases, does not affect payment behavior at all, as consumers are entirely unaware of reporting or see it as a “black list.” By communicating the many customer benefits of fully reporting payment data to a credit bureau for inclusion in a credit report, the provider benefits from improved cash flow, reduced charge offs, and improved customer loyalty. Part 2: Monday, June 27 In Part 2 of this interview, Dr. Turner explains how full-file credit reporting actually benefits consumers and why many communications providers haven’t yet embraced it. The primary reason uncovered in PERC’s research may surprise you, so be sure to come back for Part 2. Agree, disagree or comment Whether you agree with Dr. Turner’s assertions or not, we’d love to hear from you. So please, take a moment to share your thoughts about full-file credit reporting in the communications industry.

By: Wendy Greenawalt On any given day, US credit bureaus contain consumer trade data on approximately four billion trades. Interpreting data and defining how to categorize the accounts and build attributes, models and decisioning tools can and does change over time, due to the fact that the data reported to the bureaus by lenders and/or servicers also changes. Over the last few years, new data elements have enabled organizations to create attributes to identify very specific consumer behavior. The challenge for organizations is identifying what reporting changes have occurred and the value that the new consumer data can bring to decisioning. For example, a new reporting standard was introduced nearly a decade ago which enabled lenders to report if a trade was secured by money or real property. Before the change, lenders would report the accounts as secured trades making it nearly impossible to determine if the account was a home equity line of credit or a secured credit card. Since then, lender reporting practices have changed and, now, reports clearly state that home equity lines of credit are secured by property making it much easier to delineate the two types of accounts from one another. By taking advantage of the most current credit bureau account data, lenders can create attributes to capture new account types.  They can also capture information (such as: past due amounts; utilization; closed accounts and derogatory information including foreclosure; charge-off and/or collection data) to make informed decisions across the customer life cycle.