Saving money only part of the path to financial success

Just about everyone would probably be a little better off if they saved more money than they currently do, and that's certainly true of those who struggle to pay their bills each month. Failure to put some money away - whether into an emergency savings account or to pay down outstanding debts - can create serious financial problems for many Americans. However, that problem is often just part of the major financial issues many face.

One of the biggest issues, then, is the fact that people with minimal or non-existent credit histories will usually end up paying a lot more for the products and services they buy, which further puts them in a difficult position financially. For instance, many Americans may not know that when it comes to having auto insurance - a necessity for drivers in almost every state - they're going to pay more if they have bad or no credit than they would if they had good credit and a DUI arrest on their record.

That's in addition to the fact that if they ever need to tap credit for some reason, be it an auto loan or credit card, they're likely to be hit with interest rates and fees that are much less affordable than what those with stronger borrowing histories may carry.

What does that mean for consumers?
When it comes to getting a good credit score after having a bad or non-existent borrowing history, the fact of the matter is that it's often difficult to even find a place to start. Even today, after years of credit risk reduction in the broader economy, many lenders are hesitant to extend credit to a lot of so-called "slim-profile" borrowers. And again, if they do, the cost of borrowing will likely be quite high for those people.

As a consequence, many may not see another way of getting a disadvantageous account and paying higher rates and fees. However, there is one such alternative that may go a very long way indeed.

Get an alternative credit score
A large and growing number of companies now regularly use so-called "alternative" credit scores - such as those from PRBC - to make decisions about consumers by using a more complete picture of their finances. These ratings work by examining not just how a person has handled credit in the past, but also the ways in which they make a point of paying their other bills each month. That includes monthly payments for rent, utilities, cellphone bills, cable, and more.

The idea here is that it shows a far more accurate picture of how a person handles all aspects of their finances. And fortunately, consumers can self-report payment data to alternative credit scorers. Then, when they present those scores to companies that typically only rely on traditional ratings, they can rest secure in the knowledge that the law states alternative scores must be considered when presented, just as a company would normally consider a traditional score.

All that, in turn, could end up saving consumers a lot of money.

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