By Tapanjana Rudra
(Reuters) -Experian, the world's largest credit data firm, faces a potential impact on up to 40% of its revenue if the Biden administration overhauls credit reporting and scoring in the United States, brokerage RBC said on Thursday.
A proposal to create a public credit reporting agency to help increase access to traditional loans for low-income groups would put it in competition with the three credit reporting firms - Experian (OTC:EXPGF) and its U.S. rivals Equifax (NYSE:EFX) and TransUnion (NYSE:TRU).
The new agency could include more factors like rent and utility payments into lending decisions, Reuters has reported. However, the consumer data industry has opposed the move, saying they provide fair and affordable credit to all.
"(Experian) is at longer-term risk of significant financial disruption from interventions designed to tackle economic inequality in the U.S. via changes to credit scoring and data regulation," RBC analysts Karl Green and Andrew Brooke said in a client note.
Businesses representing up to 40% of Experian's overall revenue and even higher proportion of earnings could be vulnerable to impact from the proposal, they said.
RBC, which cut its rating on Experian's shares to "underperform" from "sector perform", said the market had not factored in these risks to the stock price. Shares fell 2.4% to 26.7 pounds by 1324 GMT.
A spokesperson for Experian said the company has always operated in a highly regulated environment. "We continually work closely with U.S. Federal and State administrations and our regulators."