Regions Bank customers can now have their rent, cell phone and utility payments reported to the three major credit bureaus through a new partnership with credit-building platform Self Financial, the lender announced Tuesday.
The partnership is meant to give consumers a more comprehensive view of their financial health, and allows them to build credit without having to take on new debt, the Birmingham, Alabama-based bank said.
“We were drawn to work with Regions because of our shared commitment to working toward financial inclusion,” Chris LaConte, chief strategy officer at Self Financial, said in a statement. “Working with Regions enables us to support more consumers who either are new to establishing credit, or they’re in need of solutions that reflect how they’re already responsibly managing bills and other payments.”
The fintech’s rent and utility payment reporting service is available to Region’s customers for $6.95 a month.
While millions of Americans rent homes, many are not recognized by the credit bureaus for successfully making those payments, LaConte said.
“Self addresses this problem by enabling consumers to have their payment histories taken into account so they can get the credit they deserve,” he said.
More than 45 million consumers in the U.S. lack sufficient credit history to either generate a credit report or a credit score, according to the Federal Reserve Bank of Kansas City.
This demographic is more likely to face limited employment options and rely more heavily on high-cost alternative financial products, the Kansas City Fed found.
Acknowledging the gap, bank regulators have encouraged lenders to consider using alternative data to determine creditworthiness.
In a joint statement in 2019, the Consumer Financial Protection Bureau, Federal Reserve, Office of the Comptroller of the Currency, Federal Deposit Insurance Corp. and the National Credit Union Administration noted that using alternative data could help consumers obtain additional products and more favorable pricing and terms.
“The agencies recognize that use of alternative data in a manner consistent with applicable consumer protection laws may improve the speed and accuracy of credit decisions and may help firms evaluate the creditworthiness of consumers who currently may not obtain credit in the mainstream credit system,” the regulators said.
Meanwhile, lawmakers are pushing legislation that would expand the type of data credit bureaus use in factoring consumers’ credit scores.
The Credit Access and Inclusion Act, introduced by Sens. Joe Manchin, D-WV, and Tim Scott, R-SC, would permit property owners and utility and telecom providers to report payments data to credit reporting agencies.