| > Advice For Borrowers New Credit Reporting Services For Non-Traditional Credit Consumers
by Broderick Perkins
Hot on the heels of Fair, Isaac's new "Expansion" credit score, personal data compiler First American Corporation recently announced a new array of services to help hone the credit histories of non-traditional credit consumers. First American services creditors and borrowers can tap include a non-traditional credit report, credit history verification, credit counseling and credit dispute assistance, among others. With Fannie Mae and Freddie Mac approval, the goal, says Santa Ana, CA-based First American, is to help low-to-moderate income and first-time home buyers -- particularly in the traditionally under-served Latino, African-American and Asian/Pacific Islander communities -- enjoy home ownership opportunity that could otherwise be unavailable or cost more. Similarly, a new FICO "Expansion" credit risk score from San Rafael, CA-based Fair Isaac is designed specifically to help lenders extend credit to consumers in what is considered a largely "under served" market -- an estimated 50 million consumers -- young, minority, immigrant, recently windowed or divorced and "cash-basis" borrowers who participated in the traditional consumer credit system. Fair Isaac has developed the technology to sift through apartment rent records, payday loans, rent-to-own purchases, utility bills and other credit and month-to-month payment services used by an individual when they don't have retail credit cards, bank credit cards, installment loans and other traditional consumer debts routinely reported to the nation's three major credit reporting agencies. Traditional credit reports reveal how well consumers pay individual credit accounts and include reports of any liens, judgments, bankruptcies, requests for credit and other data. The three credit agencies also provide each credit consumer with a credit score -- a numerical analysis of a consumers' creditworthiness. The score considers payment histories, level of indebtedness, credit levels, credit use, available credit, type of credit, and other related data. FICO's scoring system is the most widely used, but there are other scoring systems available. There is a growing trend of efforts to address the credit-reporting needs of non-traditional credit consumers because they comprise a sizable and growing portion of the borrowing consumer population. Consumers with "thin" or no credit files often don't get reports or scores from three national credit reporting agencies -- Equifax, Experian and TransUnion -- or only their credit dings are revealed. Without a traditional credit history, lenders can examine some of the same information considered for the FICO Expansion score but that's a cumbersome process that isn't a good fit for the highly-standardized lending system. Without traditional credit reports, lenders are more inclined to deny credit or charge more for what credit they do approve. With both a non-traditional credit report system and credit scorinig, under served consumers stand a better chance of realizing the American Dream, both companies say. "We've truly created a win-win situation for both the consumer and the lender," said Mark F. Catone, a senior vice president with First American's Credit Information Segment. Among its other services, First American's non-traditional credit report begins with any available traditional bureau data and supplements it with alternative credit sources such as rent payments, utility or insurance bills. "A lack of traditional credit is one of the largest barriers to Hispanic home ownership," said Gary Acosta, chief executive officer of SDF Mortgage and chairman of the National Association of Hispanic Real Estate Professionals (NAHREP). "By offering a resource of new credit data that can be acquired in a timely and cost-effective manner, First American has provided the mortgage lending community with the potential to reach and serve a much larger number of Hispanic and other under-served home buyers." Supplemental credit information is verified by First American, which then generates a credit report that meets or exceeds industry and secondary market underwriting requirements. The company does not offer a credit score. "We work directly with consumers on the lender's behalf to handle creditor verifications, credit bureau data discrepancies, credit scoring, nontraditional credit reporting and consumer call-center services, all as one integrated service. Our new services fill a need that the industry has typically avoided because of complexity, and are critical to helping bridge the home ownership gap," he added. | 
