This is the first in a three-part interview between Experian’s Tom Whitfield and Dr. Michael Turner, founder, president and CEO of the Policy and Economic Research Council (PERC)—a non-partisan, non-profit policy institute devoted to research, public education, and outreach on public and economic policy matters.
Dr. Turner is a prominent expert on credit access, credit reporting and scoring, information policy, and economic development. Mr. Whitfield is the Director of Marketing for Experian’s Telecommunications, Energy and Cable practice.
In this post
Dr. Turner discusses how communications providers and their customers can both benefit from full-file credit reporting. Comments, suggestions and differing viewpoints are welcome.
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Why is full reporting to the bureaus so critical for communication providers?
PERC’s research has found at least three good business reasons for media and communications companies to consider this practice:
1) Improved cash flow. In a survey of nearly 1,000 heads of household (those with primary bill paying responsibility), media and communications payments ranked below payments that were fully reported to credit bureaus. When asked how credit reporting would impact bill payment prioritization, half of all respondents indicated they would be “much more likely” or “more likely” to pay their media and communications bills on time.
Such an outcome would represent a significant cash flow improvement. In fact, case study results substantiate this, and demonstrate further benefits from reduced delinquencies and charge offs.
2) Cost savings. In a survey of media, communications, and utilities the perceived costs of reporting payments to a bureau were, in fact, substantially greater than actual costs incurred, and perceived benefits significantly lower than actual benefits. In most cases, the actual benefits reported by firms fully reporting payment data to one or more nationwide credit bureaus were multiples higher than the actual costs, which were reported as being modest as a ratio of IT and customer service expenditures.
3) More customer loyalty, less churn. In a competitive deregulated environment, telling customers about the benefits of fully reporting payment data (building a good credit history, reducing costs of credit and insurance, increasing credit access and credit limits, improving chances of qualifying for an apartment rental or job) could result in increased loyalty and less churn.
How do providers stand to benefit from reporting?
Providers benefit because fully reporting payment data to a nationwide credit bureau for inclusion in credit reports actually changes customer behavior.
Reporting negative-only data doesn’t affect customers in the same way, and, in the vast majority of cases, does not affect payment behavior at all, as consumers are entirely unaware of reporting or see it as a “black list.”
By communicating the many customer benefits of fully reporting payment data to a credit bureau for inclusion in a credit report, the provider benefits from improved cash flow, reduced charge offs, and improved customer loyalty.
Part 2: Monday, June 27
In Part 2 of this interview, Dr. Turner explains how full-file credit reporting actually benefits consumers and why many communications providers haven’t yet embraced it. The primary reason uncovered in PERC’s research may surprise you, so be sure to come back for Part 2.
Agree, disagree or comment
Whether you agree with Dr. Turner’s assertions or not, we’d love to hear from you. So please, take a moment to share your thoughts about full-file credit reporting in the communications industry.