Experian Debuts New Credit Score, Helps Bring 'Underbanked' Into Lending Fold

The poorest consumers, currently living off the financial grid, may soon be pulled back onto it in an unexpected way.

Experian, a data collection and credit reporting bureau, launched its new credit score, Extended View, on Wednesday. It claims that it could bring as many as 64 million American consumers who don't have credit scores into the lending fold.

Extended View takes into account a wide variety of information not included in a traditional credit score. That includes everything from payday loan repayment history to rental payment history, and even takes a deep dive into public records -- taking into account, for example, missed child support payments.

The Extended View score will be based on a scale similar to VantageScore, which has a range of 401 to 900.

Fifteen lenders are currently considering using the score, Steven Wagner, president of Experian Consumer Information Services, told The Huffington Post. He would not identify which companies they were, but said that among them were both small and large lenders. The company said the score could be used by banks, credit unions and auto lenders, as well as phone and utility providers.

A credit score is a quick way for a lender to assess the risk of lending to a borrower. A high score can reduce borrowing costs, while a low score -- a score that indicates higher risk -- could increase them. For those who don't have a score at all, such as people new to the country or those who live on a cash-and-carry basis, it is difficult to qualify for any kind of loan.

Experian is not the first company to open the door to credit for those who have traditionally been shut out. Last December, CoreLogic, a financial data company, launched CoreScore, which uses a similar compliation of data from third-party providers, including rental history and public records, aimed at potential borrowers with little or no credit history.

These new developments in credit reporting show lenders' hunger to tap into deeper wells of customers who are outside of the traditional credit reporting box. According to the Center for Financial Services Innovation, this group of people -- sometimes referred to as the "underbanked" by the financial industry -- is expected to grow in the coming years.

In the past year, many financial service companies have created new products -- like prepaid cards and online payday loans -- aimed at consumers who have little to no formal ties with a bank or other financial institution.

Experian estimates there are 64 million people who fall into this category. Around 20 million of those consumers are as qualified as prime borrowers, and eligible for better rates, according to Experian's research.

But for the remaining underbanked consumers, getting back on the credit grid might not help anything at all.

"Putting you in the system is not necessarily a benefit if you're not going to get affordable credit," Chi Chi Wu, an attorney with the National Consumer Law Center, told HuffPost in December, regarding CoreScore.

Experian said its new score is based on three data sources, including mathematical calculations based on existing credit data (the company would not elaborate on what those calculations included), payment data from rental real estate and public record data.

According to the company's website, it has more than 600 million unique criminal records, as well as an expanding number of civil case, bankruptcy and eviction records. Experian also gets data directly from more than 1,400 different government municipalities at the county, state and federal levels. It gets rental payment data from its national network of property management and collection companies, which is updated every 24 hours.

"We reached out to every commercially available data set and identified the ones that are most predictive," Wagner said.

He said the new score will be used with existing Experian-branded credit checks, some of which can take place at stores themselves. A vendor, for example, who does an instant credit check on a consumer for a car or a cellphone, would be able to request the Extended View check for consumers who do not otherwise have a credit score.

Currently, consumers cannot get a copy of their Extended View credit report. Wagner said that if enough lenders adopt the new score, then it could be made available to consumers in the future.