Non-traditional Credit Scores:
If you are among the millions of Americans who have not yet used traditional forms of credit, you may think you have to turn to expensive sub-prime lending institutions in order to borrow money. Without a history of using credit cards or loans, you won’t have a traditional credit score – which most financial institutions rely on to make lending decisions.
The fact is though, that many people without these scores are actually good credit risks – and they’ve proven this by being responsible with their household bills. To bridge the gap, credit scoring companies and credit bureaus have developed non-traditional scoring models that take into account other types of financial data. These alternative scores help credit-worthy consumers who do not have an established credit history begin borrowing – and creditors begin lending to an underserved market.
Non-traditional credit scores can help you gain access to loans and lines of credit that have good interest rates by evaluating your existing financial relationships that do not show up on credit bureau reports.
Who offers non-traditional credit scores
How non-traditional credit scores are determined
When lenders will consider non-traditional credit scores
To improve your non-traditional credit score
Beginning the borrowing process can be a challenge, particularly if you don’t have a traditional credit score. However, do not feel that your only options are financial institutions that charge very high interest rates and costly fees. If you have a history of paying your bills and other obligations on time, you could be eligible for good loans and lines of credit with a non-traditional credit score.
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