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Lenders should consider alternative scores

Feb 18, 2013 Sean Albert

Many individuals create resolutions during the first few weeks of a new year. For many, these might include weight loss goals or an effort to spend more time with family, but a large number of people also vow to get their finances in order, particularly after effects from the Great Recession took hold.

However, raising a consumer credit score can take years, which can affect an individual's ability to obtain a credit card or open a new line of credit, including taking out a loan or mortgage. This can, in turn, prevent people from getting back on their feet financially, because many individuals realize that quick fixes don't work.

According to the Boston Globe, lenders might want to let would-be patrons know that poor credit scores can only be remedied by taking best practices regularly. One of the most important things people can do is to pay bills on time, the newspaper noted, because late payments can drastically lower credit scores. Staying up to date and rectifying back payments is often a crucial first step.

People who already do this regularly and still have poor credit histories might find relief from innovative lenders. Many companies are looking at Payment Reporting Builds Credit scores, which calculate an often higher score based on a reported history of regular payments on utilities accounts. Lenders that take this statistic into account can not only open up their target markets but provide help to regular clients, thereby strengthening business relationships.