Alternate Data Initiative (ADI)

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The Problem

• An estimated 35 to 54 million Americans have insufficient credit information to qualify for affordable mainstream cr e dit. (Sources: Experian and FICO)
• The number of thin-file and no-file Americans may exceed 70 million, if immigrants are included. (Source: NCRA)
• Most outside the credit mainstream may only access credit from high-priced lenders including check-cashing services, payday lenders, and unscrupulous predatory lenders.
• It is estimated that each year Americans spend $4.2 billion on fees and charges for payday lenders, check cashing services, and predatory lenders. (Source: Center for Responsible Lending )
• An individual borrower could save $40,000 to $360,000 over the course of a career by opening a simple checking or savings account. (Source: The Brookings Institution )

PERC's Solution

• Nearly all energy utility and telecoms firms report negative customer payment data (delinquencies and defaults) to credit bureaus, either directly or indirectly through collections agencies.
• Under the current system, energy utility and telecoms customers are penalized for late payments, but are not rewarded for timely payments.
• PERC promotes the full reporting of customer payment data—negative and positive data (timely payments and the amount paid)—by energy utility and telecoms firms to consumer reporting agencies (CRAs) as a way of helping millions of Americans quickly build a positive credit history and enable them to access affordable credit.
• In 2004, PERC launched its Alternative Data Initiative (ADI) with the goals of (1) Exhorting energy utility and telecoms companies to fully report to CRAs; and (2) Moving the market by encouraging demand (use by lenders in underwriting) and supply (collection of data by CRAs).

The Roadmap
ADI Phase 1: Framing the Issue (January 2004—March 2005)

• Testified before House Financial Services Committee.
• Released “Giving Underserved Consumers Better Access to the Credit System,” (National Press Club).

ADI Phase 2: Making the Market (April 2005—January 2007)

• Released “Give Credit Where Credit is Due” with Brookings UMI, measuring economic and social impacts of full payment reporting to credit bureaus.
• Built broad coalition of supporters including lenders, credit bureaus, CRAs, and consumer advocates.
• Extensive outreach with public and private sectors.

ADI Phase 3: Building a Policy Consensus (February 2007—December 2008)

• Survey of energy utility and telecoms firms building business case to report.
• Study measuring impacts of having rental payment data and other public record data reported to CRAs.
• Federal and state outreach.

ADI Phase 4: The Last Mile (January 2009 - December 2010)

• Extensive outreach with state lawmakers to remove any statutory/regulatory barriers to full payment reporting.
• Outreach to top energy utility and telecoms industry executives to exhort to fully report payment data.