Americans' use of alternative consumer scoring is on the rise, as more lenders and credit card companies examine alternative credit, such as rent, utilities and cellphone bills, when coming to a decision. After years of not openly offering information on how consumers can use this information to their advantage, three credit bureaus have stepped up to help consumers looking to dig themselves out of the hole.
Capital One Financial is one such firm that is examining consumers' alternative credit scores, and experts claim other major banks will soon follow suit. Often, this type of scoring was overlooked because it was largely unpredictable. However, more consumers have needed to rely on this data in an effort to recover from the recession. "As we came out of the downturn - and even in the downturn - what they realized is that the data could help them across their entire book of business, and then it became a much bigger prioritization," Mike Mondelli, founder and chief executive of L2C, told Collections Credit Risk
. "So they tested it more completely." Alternative consumer credit data
includes cellphone payment histories and rent and utility payments. Often, consumers may be behind on repayments of big-ticket purchases, but keep up to date with their monthly rent. However, until recently, this information was disregarded by credit lending agencies.