Alternative Consumer Credit Data Plays an Important Role in Financing

The year 2020 is one that will live on in infamy long after the chaos of global pandemic and the financial fallout of a nation shutting down for several months have passed. We’ve learned a lot during that time, including the importance of alternative consumer credit data for painting a clearer picture of someone’s “creditworthiness.”

Things Traditional Credit Reports Leave Out

The problem is that there are plenty of examples of timely payment and otherwise creditworthy behaviors that are left out of credit reports from traditional reporting agencies. These include things like:

• Rent payments.
• Utility payments.
• Other recurring, monthly payments.

These are precisely the types of payments that reveal responsible monthly repayments and they aren’t included in most standard credit reports. They are, however, used in alternative consumer credit reports.

Here’s the kicker though. Consumers have a right to use evidence of these timely payments to underscore their own credit-worthy behaviors. Moreover, mortgage lenders are required to consider this information when making crediting decisions for home loans as long as the borrower requests for them to do so. If they refuse to consider this alternative credit reporting, they could face legal repercussions.

Unfortunately, far too few know about it, or even how to go about using this information to their advantage when attempting to buy a home, purchase a car, or qualify for other types of credit. Consumers should consider calling the National Foundation for Credit Counseling to get information about their rights and responsibilities when it comes to reporting and using alternative consumer credit data to help them achieve their financial goals.

How is Alternative Consumer Credit Data Useful to Businesses?

Traditional credit reports from the “big three” reporting agencies only paint small pictures of a person’s overall credit situation. It shows how well they manage their credit scores rather than how well they pay their mundane day-to-day bills. Alternative consumer credit data, like PRCB, is all about how well consumers keep up with their day-to-day bills.

More importantly, it establishes credit histories for those who shun traditional debt in the form of credit cards and loans. Sometimes, the most responsible credit users are those who do not use credit but pay with their own funds instead. Traditional credit doesn’t have a “box” for these individuals, so they are not represented on these reports at all.

Alternative credit reporting gives them representation on an even footing, showing creditors that they are responsible users of credit, perhaps the most responsible of all, by only applying for credit for things they absolutely need credit to purchase, such as homes.

Businesses who use alternative credit reporting in their credit decision processes are able to extend credit based on the entire picture of a person’s creditworthiness, rather than the limited scope with which the major credit reporting agencies determine these values or scores.

Microbilt is committed to helping businesses and consumers move beyond the traditional credit reporting agencies so that organizations are able to reach out to potentially valuable new credit customers and consumers are able to get the credit they honestly deserve.