News & Resources

Ways to offer alternative credit options to consumers

Mar 03, 2015 Sean Albert

Ways to offer alternative credit options to consumers

Credit reports are sometimes not an enjoyable topic to speak about with consumers, as they can affect people's ability to receive the money they need. Some may think consumer credit data sums up the creditworthiness businesses have in an individual. It can potentially impact the public's ability to get hired for jobs and make large purchases since their dependence is judged for it. Those who have had financial trouble in the past often have reason to fear looking at their credit reports, which is why alternative credit is a great opportunity. It can be difficult to convince consumers to use these opportunities, which is why professionals have to find different opportunities and tactics to persuade them.

Alternative credit is another selection for the public and can be offered to consumers by creditors and lenders. It allows for those struggling without any traditional credit history, or one with blemishes, to get the money they need in a short amount of time and build credit. This option should be openly encouraged to clients who are scrambling to find ways to bulk up their credit report.

Store credit cards

The Crimson White reported on alternative credit methods that the unbanked and underbanked can use to build credit history. However, consumers must have personal control and strict spending habits when using proprietary cards - or store credit cards - properly, which should be emphasized.

"In terms of what we call the underwriting standards, the ability to get a store card in many cases is easier than getting a credit card," Robert McLeod, a finance professor at the University of Alabama and a John S. Bickley Faculty Fellow at Culverhouse College of Commerce, told the source. "Students who are just starting out, for example, may find it easier to establish credit by getting a card from a merchant or a gas company card. Once they establish credit, it'd be easier to get a conventional credit card."

Short term loans
When consumers desire money immediately but have no credit history or a poor credit score, short term lenders are available. It's a possibility for those who are in need of money and have to get it quickly. A study by the University of California found that short term loans provide a valuable service to the community, helping those who are facing extreme financial distress. It went on to insist that short term lending regulations should be eased to make this access to money easier. The public gets their money and paying back the short term loan allows them to build up credit history.

Consumers often misunderstand what short term loans can do, as well as their usefulness. Professionals can help them understand what they're good for and how they can be used to customers' advantage. It can be difficult to convince them how beneficial something so scrutinized can be.

Many customers are faced with difficulties in their credit report history, but there are ways to offer these options to them. Money is always necessary, and professionals are there to provide opportunities for struggling consumers to access it.