Our bank uses Experian to obtain credit reports on loan applicants. Sometimes a report will list several "self-reported" debts. These self-reported debts by the applicant are usually for utility bills or cell phones.

For Fair Lending compliance, should we be excluding these debts from the debt-to-income ratios?

You don't count utility bill payments in the DTI for someone that does not have these on their credit reports - do you?

Absolutely not. The issue is that we have an insurer for a pending loan application that does not exclude self-reported utilities and they stated that we should deny the customer for excessive debts in relation to income. Seems like that is putting us in a potential fair lending issue.

We are going to plead our case again with the loan insurer and hope they see our point.

Thanks.

That would represent a huge fair lending issue. You need to kick that up the chain at the insurer.

Experian came up with a “gimmick” to increase credit scores by letting the responder add utility bills, cell phone payments, etc to their credit report. This builds up history and usage. Like the others have stated, the bank would be treating applicants differently. Most people have cell phones, so unless you ask EVERYONE, the bank could have an issue. Those “gimmicks” generally attract the more vulnerable so many would be prohibited basis applicants.