Published: August 2013

Utility records may put low-income consumers at a disadvantage

Consumer advocates express concerns over full file utility credit reporting as a means to deem consumers as "credit worthy."

Credit has taken on an increasingly important role in our economy. Accumulating assets is necessary for low-income families to move out of asset poverty and become financially secure. But without a credit history, it is difficult if not impossible to qualify for a mortgage, obtain a credit card, buy a car, or finance a small business.

The reporting of nontraditional or alternative credit data has frequently been suggested as an alterior option. Since traditional data, such as credit cards, mortgages, and student loans, are not typically available for lower income families, the use of nontraditional data, such as utility bills, mobile phone bills, and rental payments, is viewed as a means of incorporating these individuals into the credit reporting industry. Proponents of full utility reporting claim that reporting utility payments will help improve the credit reports of tens of millions of consumers.

However, there are significant concerns about the use of full file utility credit reporting data. Consumers should be allowed to voluntarily opt-in to full file utility credit reporting, but Consumer Action and coalition advocates are very concerned about the effects of full file utility credit reporting that is not voluntary for consumers. This practice will add millions of new negative reports to the credit reporting system and may harm many consumers. It also may undermine long-standing protections developed by state utility commissions across the country to protect consumers when utility bills spike during weather extremes. Full-file utility credit reporting could also hurt job seekers when employers use credit reports, and consumers when they buy home or auto insurance.

Lead Organization

National Consumer Law Center (NCLC)

Other Organizations

Center for Economic Justice | U.S. PIRG| Consumers Union | National Association of State Utility Consumer Advocates | Center for Digital Democracy | National Fair Housing Alliance | Consumer Action | Action, Inc. | TURN—The Utility Reform Network

More Information

For more information, please visit the NCLC website.

Download PDF

Utility records may put low-income consumers at a disadvantage   (letter-concerns-full-file-utility-credit-reporting.pdf)

 
 

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