MicroBilt and PRBC Team to Help Small Businesses Serve Consumers with "Thin" Credit Histories

MicroBilt Corporation and PRBC are teaming to help small-to-medium (SME) enterprises and financial institutions conduct more business with an estimated 50-70 million American consumers with “thin” or no established credit histories. The two companies will merge payment data collected by MicroBilt and PRBC in PRBC’s data repository to help more consumers qualify for FICO Expansion scores used by lenders and financial institutions in underwriting new loans. As part of the agreement, MicroBilt will make an equity investment in PRBC.

The current credit crunch is forcing smaller businesses to demonstrate to their financial institutions that they’re being very cautious in originating new loans. As a result, it is more difficult than ever for historically underserved consumers with ‘thin” or no credit histories such as young adults, senior citizens, and new Americans to qualify for and receive competitive rates. Businesses in turn are being forced to turn away potential customers that pay bills on time but lack credit payment histories based on mortgages, auto loans or credit cards.

Joint efforts will leverage trade line data reported to MicroBilt by smaller businesses and financial institutions that originate credit as well as PRBC data from bill payment processors, billers and consumers, subject to a satisfactory independent verification.

“A major segment of the consumer market is still disadvantaged by the traditional reporting industry,” says Bob Raleigh, Chairman of MicroBilt Corporation. “PRBC has done a tremendous job in developing methods and systems of aggregating non-reported bill payment data to help consumers demonstrate good payment track records and qualify for credit at competitive rates. By combining PRBC’s data with the trade line data reported to MicroBilt by thousands of smaller companies, we can help this large sector build credit histories and receive FICO Expansion scores much faster, and in turn enabling businesses to grant more credit with less risk.”

The 125,000 users of MicroBilt’s credit origination services include tens of thousands of “buy here, pay here” auto dealers and local furniture stores, jewelers, RV and boat rentals, landlords, community banks and credit unions, many of whom work with immigrants, senior citizens, students and other consumers to purchase property, vehicles, etc. MicroBilt helps businesses verify credit and identity while originating credit, then allows those too small to work directly with national credit bureaus to report trade line data as customers make payments.

SMEs’ Overall Addressable Market Could Grow 25%
“In working with MicroBilt, we’re creating a win-win situation for both lenders and consumers,” said Michael Nathans, PRBC founder and chief development officer. “Just as many consumers are not recognized by the primary reporting system, many smaller businesses had no means of reporting good or bad debts directly to major national credit bureaus. MicroBilt’s established reporting capabilities will help increase the ability of the current credit scoring process to address this growing base of American consumers.”

By contributing consumer bill payment records and trade line data reported by smaller businesses to the calculation of FICO® Expansion® scores, MicroBilt and PRBC estimate smaller businesses, banks and credit unions could grow their overall addressable customer bases by as much as 25%. Because many businesses wanted help assessing the credit risk of applicants who lacked a traditional credit report, Fair Isaac Corporation introduced the FICO® Expansion® score in 2004 based on alternative credit data. By offering a richer data set to the FICO® Expansion® score for assessing risk, MicroBilt and PRBC expect their joint efforts will enable many consumers to get better loans and SMEs to do significantly more business.

PRBC is a bill payment credit bureau that collects, stores, scores, and reports bill payment data in compliance with the Fair Credit Reporting Act (FCRA) and the Fair and Accurate Credit Transaction Act (FACTA). It is the first credit repository to give prospective borrowers the tools to demonstrate their creditworthiness without the need to go into debt. PRBC receives payment data from financial institutions’ bill payment services when consumers choose to have their payments reported. In addition, PRBC has partnered with the National Credit Reporting Association to use industry best practices to verify trade line accounts and up to three years worth of prior bill payments that consumers can report directly to their personal PRBC file.

PRBC has reviewed and has determined that PRBC Reports comply with Fannie Mae’s, Freddie Mac’s, and FHA’s standards for documenting creditworthiness in the absence of a traditional credit history and score. PRBC does not charge consumers a fee to enroll in the service or to view their own file.

MicroBilt has been an industry leader in risk management information since 1978 and an active member of the Consumer Data Industry Association (CDIA). With solutions optimized for small to medium enterprises (SMEs), MicroBilt provides flexible data access to leading Consumer Reporting Agencies (CRAs) and a broad range of industries.