Tuesday, May 09, 2006

Verizon Reporting Payment History to Credit Agencies

If you're a young person without much of a credit history, you'll be happy to find out that Verizon is now reporting its customers' payment histories to the major credit reporting agencies.

Why is that good, or even a little bit interesting? Because many people, especially young people, get caught in a vicious cycle when trying to build a credit history--they can't get credit because they have no credit history, and they can't prove they can handle credit unless someone gives it to them. These same people may already have a history of paying rent on time, paying utilities, paying cell phone bills, etc., but the credit reporting agencies generally only use credit cards, auto loans, and mortgage loans when calculating a person's credit score.

If utility bill payment, cell phone payment, rent, etc. could be factored in to the credit score, more people could gain credit under more favorable conditions--they wouldn't be treated as high risk and have higher interest rates just because of a lack of "credit" history. By reporting to the credit reporting agencies, Verizon is helping its regular-paying customers to boost their credit scores. (Or decrease their scores if they're not paying their Verizon bills.)

Will more utilities and service providers follow Verizon's lead? It could be a good thing for both the companies that do the reporting and the customers who pay their bills.


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