Feb 28, 2013 Sean Albert
When individuals look at their credit score or review their financial history, they might think that, at least for the next few years, all their hopes for borrowing are lost. In the past, if scores were low and histories had a few blemishes, credit card companies and other lenders would consider these people risky and either would not lend money or do so with astronomical interest rates.
Times are changing, however, as many lenders are now considering alterative credit scores? that can give a more well-rounded view of a person's financial habits. And because so many companies are doing so, the ones that stick to status quo methods are probably losing out on a vast amount of potential business.
According to Fox Business, credit card providers and lenders are increasingly considering other trends in addition to income and FICO scores. The source said that new factors brought into the mix include a consumer's professional licenses, relocation history and criminal background.
A growing number of those in the credit business are also considering Payment Reporting Builds Credit scores, which show positive histories of repayment for utilities accounts.
The New York Times asserted that, for now, lenders are the place to go if consumers want alternatives considered because big banks are largely not using such patterns to validate credit applications. As such, lenders might want to take this to heart and gain the competitive edge over more traditional businesses - they can capture a whole market being effectivily shunned by large financial institutions should they use alternative scoring.
"Issuers are using other data sources to make more informed decisions," credit card consultant Philip Philliou told Fox Business, adding that alternative scoring "helps the issuer develop a clearer picture of who the cardholder is."