About 11 percent of U.S. adults are credit invisible. In addition, 19 million have "unscorable" credit records, meaning there's not enough information available to assess their creditworthiness. Many of those consumers may be financially disciplined, but traditional credit bureaus provide little to no insight regarding the matter because of the limited data they collect.
For example, suppose a person doesn't own a credit card, but pays his or her rent, utilities and phone bills on time and in full every month. If you knew this, you'd likely see that customer as fiscally responsible. This is why alternative credit reports are necessary.
Alternative credit scores can also give you an edge over your competitors. Do you think they're using alternative credit reports to assess their customers' ability to pay back loans or lease products? You might be surprised by how many are not. By moving beyond traditional credit scores, you could attract the customers other businesses are showing out the door.
U.S. authorities are paying close attention to how lenders and other businesses accept people on the basis of their credit. They're catching onto the fact that a low traditional credit score doesn't necessarily indicate that a person isn't capable of handling a loan.
The Equal Credit Opportunity Act (ECOA) ensures organizations are conducting fair, thorough appraisals of people's financial conduct. The ECOA states that creditors need to regard credit information that isn't reported through a credit bureau, at an applicant's request. This means that if a customer provides you with an alternative credit report, you're compelled by law to factor it into your decision making.
PRBC Main Street provides you with the resources necessary to fairly judge individuals looking to take out loans, lease equipment or take out other types of credit. More than 8,500 businesses and counting use our service to connect with creditworthy, underbanked consumers.
Whenever you encounter a customer with a low traditional credit score, you may direct them to PRBC to obtain a more complete analysis of their payment habits. All they have to do is sign up for our service, and within a day, they'll receive credit scores that accurately reflect their financial responsibility.
If you want to gain a competitive advantage and better identify credit-eligible consumers, speak with one of our representatives to learn more.
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