Where Can Consumers Go to Find Alternative Credit?
Far too many people are under the mistaken impression that if a major lender tells them “no” they have no other alternatives to consider. While that was the story once upon a time, it is no longer the case for all credit situations and circumstances. Some lenders have discovered that you are so much more than your traditional credit score. These lenders offer alternative lending options to help you get the things you need in life, such as a new car, personal loans, and more. Here’s what you need to know about alternative lending sources.
What is Alternative Credit?
Alternative credit lenders use data other than what is revealed in a standard credit report in order to extend credit and make lending decisions. Lenders that utilize alternative credit data for lending decisions do use a credit score. But this credit score is based on different, up-to-date, and often more accurate information about the state of your ability and likelihood of repaying the money.
How does the Alternative Scoring Process work?
You will have a credit score. This one, though, is different from previous credit scores as it includes everyday payments when calculating your credit score. This includes payments for things like:
- Phone bills
- Utility payments
- Internet payments
These are all things that are expressly excluded for most ordinary credit scores but can make a world of difference for improving your alternative credit score in a manner that is more favorable with lenders.
How Widely is Alternative Credit Available?
While it isn’t universally available at this time, the number of lenders and organizations that consider alternative credit scores is on the rise. More importantly, it has been recognized by the Federal Equal Credit Opportunity Act (ECOA) which requires lenders to consider alternative credit for consumers who have nontraditional payment histories.
The basic difference between the way alternative and traditional credit scores are calculated to have little difference other than the amount of data that is used to create the score. Because all your monthly bills are included in the scoring process, there are more opportunities for positive credit habits to balance out missteps you may have taken along the way.
Where Can You Find Alternative Lenders?
PRBC reports that the Equal Credit Opportunity Act requires lenders when presented with “proof of alternative payment history” to consider that history when making credit decisions. This means it can be used anywhere you would traditionally apply for credit, including car dealerships, banks, credit agencies, jewelry stores, and more.
Be warned, however, that even with a high alternative credit score, lenders each have their own “standards” and criteria they use to determine creditworthiness. An alternative credit score doesn’t guarantee approval. It simply improves the odds for many borrowers.
At PRBC, we understand that you are so much more than the numbers appearing on your credit report. We want to make sure you have every opportunity to enjoy financial security and other benefits that go hand in hand with favorable credit. Contact us today or sign up for your own alternative credit score to learn more about how we can help you.