9/30/2013 6:15 PM ET|
The credit report you haven't seen
Alternative credit data such as your rental history or utility payments can help fill out an otherwise thin or shaky credit profile.
Have you struggled to maintain good credit? Or do you avoid credit, and try to pay for everything in cash? Or perhaps your credit took a dive during the recession. If so, you may find getting credit frustrating and difficult. You may have even given up on trying to get a credit card or auto loan.
An estimated 50 million Americans are considered "underbanked" because they use non-traditional lending services such as payday loans or pawn shops. "15 million people were credit damaged during the recession but have since recovered," says Ankush Tewari, Director Credit Risk Decisioning for LexisNexis. "Some of those people have stabilized and some haven't, but just looking at the score you may not be able to tell that."
LexisNexis is the largest provider of what's called "alternative credit data" -- information that doesn't appear on traditional credit reports but can help lenders make better credit decisions. This data may help lenders extend credit to more consumers.
Here are four things you need to know about alternative credit data (ACD) -- and how it may help you get approved for loans and credit cards at better rates:
1. There's more than one way to approve an application.
Rent information, utility payments and records of eviction. Professional licenses held by the consumer. These are types of information that some lenders are finding helpful in trying to extend credit. This information, however, doesn't usually appear on the credit reports from the major credit reporting agencies.
But with this kind of data, lenders may be able to extend credit to more "thin file" and subprime consumers. Consumers with thin files don't have much of an established credit history with the major credit bureaus. And subprime consumers have poor credit scores due to problems such as late payments, repossessions or foreclosures.
"If consumers have a thin file -- (ACD) helps lenders fill in the gaps the credit report data may not have," Tewari explains. For example a lender may be able to take into account the fact that a borrower has a stable address history or lives in a high value property. "All those items help a lender get a feel for the borrower and they correlate with creditworthiness," he says.
2. Lenders want you.
There are definitely lenders who want to find ways to lend to the underbanked and subprime market. "Not only are the underbanked a large and eager market, they're also a fast-growing one," says a recent study conducted by Javelin Strategy & Research. These consumers are more likely to apply for a credit card, and generated some $78 billion in fee and interest income, according to a 2012 CFSI study.
Not every lender can or will be willing to take the risk that comes with lending to consumers with low or non-existent credit scores. But some are considering it, and they are looking at ways ACD will help them say "yes" more often.
3. You're more than your score.
Underbanked consumers are much more likely to have missed payments, and their credit scores have likely taken a hit as a result. The Javelin study found that when underbanked consumers with low credit scores are asked the reason for their poor scores, they are more likely to cite late payments (33% vs. 28%) and going into collections (31% vs. 25%) compared with all consumers.
Young people, on the other hand, are more likely to run into a problem due to a lack of credit information. The Javelin study found that youth are three times as likely to be denied credit cards and more than five times as likely to be denied auto loans compared with consumers aged 25 and older.
To help approve more of these applicants, lenders may ask them for more documentation, such as information about employment status and length of time on the job, pay stubs and bank statements. But that causes frustration with borrowers, who may decide it's not worth it. ACD may prove to be a way for them to get the information they need without making the consumer produce reams of documentation.
4. You can get this credit report for free.
You can request a copy of your LexisNexis RiskView report for free by calling 866-897-8126. If you find a mistake, you can dispute it, just as you would a mistake on your traditional credit reports. "We are very transparent," says Tewari.
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Credit Reports are about the most damaging slander to your credibility imaginable. All 3 bureaus are culpable. It just cost me hundreds to clean the crap off my credit report that should never have been there in the first place. I have no repossessions, foreclosures, bankruptcies or judgments but I do have many little write offs that have been re-aged by these maggots who buy zombie debts from the 1990s. Most less then 100 dollars from people that opened credit lines over the phone using my SSN and getting a cell phone, electric, rental agreements for washing machines etc etc.
The big 3 are responsible for damaging my credit along with yours maliciously. these hits all bring your score down, in my case as much as 100 points! WHY? They allow these parasites to put stuff like this with no validation of the debt, they just ding your credit at will if you don't pay them. Most of the information the bureaus have is just wrong, inaccurate and false. Someone is benefiting financially from these acts and I believe it's the BUREAUS!
It now becomes incumbent upon you to get it off while showing you creditors that you're a deadbeat until you do. Someone needs to spank these bastards good for having false info in your file. I personally have made it a quest to sue these scumbags for holding a gun to my head while I have to pay some law firm to clean what should not have been there in the first place.
I got busy and cleaned up my Credit Reports with the 3 Major Credit Bureaus. My Credit Scores took a tremendous jump in my favor. Since then I have kept track of it and watch it fluctuate as much as 40 points even though there is no change in my spending/payment habits.
I have also noticed it seems they are continually hunting for past accounts to add to my record. I say this as I was surprised to see several closed, paid in full accounts, that were over 10 years old added to my record.
It almost appeared as if they were looking for accounts that would lower my score, thus increase the interest rates I could be charged.
I have also found in following my credit scores there are multiple scales used to determine a persons credit score. Which scale used seems to depend on who is doing the checking.
Bottom line Credit Reporting is just another example of "Follow The Money."
This ACD may be good alternative for young persons - like in the old days when a person had to prove their credit worthiness before the Big 3 entered the picture.
There is reason many age 25 and under might be denied, without credit files... Unfortunately, many, though not all, get out of the house, go to college, see the available balance on their card, and go shopping. They're still young, and inexperienced yet, and not all have learned to budget yet. That often comes latter, with experience...
old man 76: are you kidding me?! My mother was 67 years old & she had 10 credit cards that weren't activated & 5 that had balances. The $$ for their credit cards comes out of their estate. my mother didn't have much (SO WHY WAS SHE APPROVED FOR SO MANY DAMN CREDIT CARDS) but there were her credit card debtor's holding out their hands. They TRIED to get ME to pay them while her estate was going thru escrow but I refused because I knew the law. They backed off very quickly when I referred them to my escrow attorney.
Having an escrow attorney cost $3,000 and he was worth every penny. People who try to do it on their own are crazy. Every I & T have to be dotted and crossed or the court will throw it out & make you refile for an additional charge.
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