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Verizon Reports More Credit Info: Practice of Furnishing All of a Customer's Payment History to Agencies is Becoming More Common.

Posted on: Friday, 3 March 2006, 06:00 CST

By Jerry Lynott, Wilkes-Barre, Pa., Times Leader

Mar. 3--In what is becoming a common practice among companies that issue monthly bills, Verizon has begun to furnish customer payment history, good or bad, to credit reporting agencies.

It's a shift from past reporting practices and aims to reduce the number of delinquents and assist on-time payers in developing a credit score favorable to lenders, insurers and even employers doing background checks on potential hires.

In January, Verizon Pennsylvania included a notice in the monthly bill that it was furnishing the payment information to the major credit reporting agencies.

Under the federal Fair Credit Reporting Act, the company can provide the information to the agencies, Experian, Equifax and TransUnion, as long as customers are notified. The agencies or bureaus in turn sell their reports to lenders.

Verizon offered a limited explanation in the monthly statements under the heading, "Important Credit Reporting Notice."

Company spokesman Lee Gierczynski elaborated further in an e-mail.

Verizon sends the agencies notice when the bill is issued and a subsequent one when it is paid, he said. "It's a process used by many credit card companies, banks and, increasingly, monthly billers of various kinds like department stores and utilities, and vastly enriches the validity of one's credit rating."

Traditionally credit reporting agencies received notice of accounts that went to collection agencies, said Greg McBride, senior financial analyst with the online financial data resource Bankrate.com. "It is a new wrinkle."

He compared the past practice to the teacher sending a note home to parents saying what their child did wrong in school. Now the teacher is sending home a note about how well the student is doing.

McBride agreed that on-time payers can benefit, especially those that are credit worthy but lack the traditional data of mortgage, car loan or credit card payments.

In a study released last July, the Information Policy Institute supported providing credit reporting agencies with utility and telecom payment data and called it a "win-win-win" for borrowers, creditors and furnishers.

The study titled "Giving Underserved Consumers Better Access to the Credit System: The Promise of Non-traditional Data," estimated between 35 million and 50 million people who don't have credit accounts or credit histories with too little information could qualify for credit from mainstream lenders. In order to deliver fully on that promise, the study found that there are some regulatory and economic barriers that must be overcome.

"The single biggest component" credit reporting agencies use to develop a score "is prompt payment of bills," McBride said.

The history accounts for approximately 35 percent of the score lenders look at when determining what someone will pay for a car, home or credit card.

Scores are based on a system developed by the Fair Isaac Corp. and range between 300 to 850. The higher the FICO score the better, with most people scoring in the 600 and 700 range, according to the Fair Isaac Corp. and the Consumer Federation of America.

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--A summary of a consumer's rights under the Fair Credit Reporting Act can be found at .

--To receive a free credit report, visit www.annualcreditreport.com [http://www.annualcreditreport.com] .

--To view the Information Policy Institute's report visit, .pdf [http://www.infopolicy.org/pdf/nontrad.pdf] .

Jerry Lynott, a Times Leader staff writer, may be reached at 829-7237.

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Copyright (c) 2006, Wilkes-Barre, Pa., Times Leader

Distributed by Knight Ridder/Tribune Business News.

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NYSE:VZ, Unknown:EXR, NYSE:EFX, Unknown:MMG, NYSE:FIC,

Source: The Times Leader (Wilkes-Barre, Pa.)

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