What to do when a customer walks in with a PRBC report
You may feel a bit confused when a prospective borrower walks into your office with a PRBC alternative credit report. For one thing, you may not know what it is, much less if it would help you assess the customer's creditworthiness. Here's what you need to know.
"The PRBC report provides a comprehensive overview of a person's financial situation."
What the PRBC alternative credit report is
The PRBC alternative credit report works similarly to a credit report you'd receive from Equifax, TransUnion or Experian, but it collects a different set of information. PRBC collects data on consumers' rent, internet, utility and insurance payment habits.
One of the advantages the PRBC report has over traditional ones is that they provide a comprehensive overview of a person's financial situation. You can not only see whether people pay their bills on time and in full, but also see how they handle unexpected medical or auto expenses. The report also includes:
- Social Security numbers.
- Bankruptcies, liens, judgments and eviction records.
- Real property ownership.
- Date of birth, driver's license number, aliases and phone numbers.
- Current and previous address history.
- Banking inquiries.
- Alternative credit trade lines.
Do you have to accept these reports? Legally, yes. According to the National Consumer Reporting Association, the Equal Credit Opportunity Act states that if a credit applicant asks you to consider information that isn't included in their traditional credit report you have to do so in good faith.
How can you get the PRBC report?
Just as you would run a credit check on your borrower through one of the big three credit bureaus, you can pull reports from PRBC. There are two ways you can receive reports:
- Through the online portal: Submit an application to use PRBC Credit Builder. Once we approve your application, we'll send you a link your customer's PRBC report through an email and/or SMS to your smartphone. Once you click the links, you'll be able to see your customer's report.
- Through our API: If you have an internal system that you want to connect to your report database, we have an API that can help you do so. Just call the PRBC Credit Builder Web Service API service to get the token you need.
"People who fell behind on monthly bills had a 22.3% mortgage delinquency rate."
Can alternative credit reports help you assess creditworthiness?
So, you're legally obligated to accept PRBC reports and you know how you can get them, but have they proven their ability to help businesses analyze the risk of lending to certain individuals?
The Policy and Economic Research Council actually conducted a study to answer this very question. The institution gathered actual consumer credit file data as well as utility and telecom payment histories from July 2009 to June 2010 to determine whether the alternative credit data would indicate if a person was delinquent or not.
It turns out that the utility and telecom data consistently predicted when someone fell behind on mortgage payments. For example, individuals who paid their utility and telecom bills on time and in full had mortgage delinquency rates of 4.9 percent on average. In contrast, people who fell behind on monthly bills had a 22.3 percent mortgage delinquency rate.
Besides being reliable sources of information, PRBC reports can also help you engage customers who don't have traditional credit reports. If you want to read more about developing relationships with "credit invisibles," check out this article.