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Recording utility, rent and telephone bill payments into credit histories can help minority and low-income consumers achieve credit scores, thereby gaining access to affordable mainstream credit, suggests a report released last week by the Political and Economic Research Council. The average credit score for consumers who initially had only a utility or telephone payment and then opened a new account rose the longer they kept the new accounts. Consumers with new accounts for less than a year had an average score of 613. These accounts could be nonfinancial, such as a utility, or financial, such as a credit card, mortgage or car loan. Consumers with new accounts between one and three years had an average score of 637, according to the report by the Chapel Hill, N.C.-based nonprofit research organization. The new accounts for this group were only financial accounts. The study involved the credit files of more than 128,000 consumers between 2003 and 2005. "Using alternative data to begin a credit file is not harmful in a way that people might assume," Katrina Dusek, research fellow at the council, tells CardLine sister publication Collections & Credit Risk. "One of the common critiques of our study is that using alternative data opens up a consumer to a lot of credit offers that they're not able to repay. This is showing they are being offered additional credit, they're choosing additional credit and their scores are going up," Dusek says. "They're not going down due to being overextended."

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