Experian Will Enable Consumers To Build Their Own Credit Reports

Consumers who do not have credit reports will be able to create their own through a new program being developed by Experian EXPGY.

What Happened: The Wall Street Journal reported that Experian is rolling out Go, a program which will enable consumers to build credit reports by linking recurring non-debt accounts to their record.

Go has been tested in a pilot program since October with 15,000 consumers, and the company reported consumers were able to go from having no FICO score to a 655 level, which is considered to be a score that lenders view as a decent-to-good credit rating. Experian stated recurring bill payments will show which consumers would display a history of financial responsibility.

"The better the representation of every individual we have, the more successful we are as a company," said Craig Boundy, chief of Experian North America.

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Why It Matters: Approximately 28 million adults do not have reports with the three major credit reporting companies — Experian, Equifax EFX and TransUnion TRU. Without a credit report, consumers find it virtually impossible to obtain loans from mainstream lenders and are forced to seek financing from higher-cost payday lenders.

Black, Hispanic and immigrant consumers have a disproportionately high level of being without credit reports, along with college students who are new to borrowing funds.

However, the effort is not entirely altruistic — credit reporting bureaus will be able to generate more sales of consumer data to lenders if they have a larger pool of individuals to track.

Photo: Mohamed Hassan/Pixabay.