Guess who is checking your credit score…
Kathleen House didn’t realize that three late power-bill payments in Washington state would cost her $100 when she moved to Chapel Hill.
But Duke Energy required the deposit in December to turn on the electricity that powers and heats her apartment on the edge of Research Triangle Park.
House had to pay because a utility credit score flagged her as a potentially risky customer,even though her standard credit report was clean, she said.
How consistently she paid her credit card bills over the years did not matter when it came to turning on the power in her new city.
She came up against a growing trend of specialized credit scores created and tailored for individual sectors, such as utilities.
Credit bureaus are crunching specialized data to predict consumer behavior, including whether a customer will pay bills on time.
Utilities also can use a national database of unpaid utility bills across the country. The information, managed by Equifax, is provided by utilities that are members of the nonprofit National Consumer Telecom & Utilities Exchange.
Some advocates say consumers are in the dark about how their creditworthiness is assessed and about their right to inspect or challenge credit information, whether for a utility score or the better-known FICO score, is used by mortgage lenders and other companies.
“Consumers are unaware that utilities are starting to report payments to credit bureaus,” said Ed Mierzwinski, a credit reporting expert with the consumer watchdog group N.C. PIRG. “The credit bureaus convert these long payment resumes into scores. Insurance companies get a type of score that’s only used for insurance. Credit card companies get one. And the utilities are looking at a customized score, too.”
Deposits help defray those losses, but the deposit still, on average, only covers 31 percent of a customer’s unpaid bill, she said.
- Source: New eyes on your credit score, The Charlotte Observer, Jan. 14, 2007
