Until now, you might have gone through life without so much as a thought for your credit report. However, when you applied for a car loan, the lender turned you away. Why? You have no credit history.
But why should that matter? You pay your utilities on time, never forget to pay the rent and regularly put money in your savings account. The problem is, there's no way for a lender to know this, because traditional credit reports don't include this information.
Still, you're going to need that loan. What can you do if you have no credit history?
Get an alternative credit report
Alternative credit reports provide lenders with information regarding your bill payment habits. They show how diligently you settle your utility, rent and telecom expenses on a monthly basis, as well as confirm whether you have any outstanding liens or judgments in your name. They essentially provide businesses with a comprehensive financial profile that allows them to determine whether you'd be a responsible borrower.
An alternative credit report works somewhat similar to a traditional credit report. For one thing, it uses a three-digit score just like you'd get from Equifax or one of the other two big credit bureaus. One of the key differences is that alternative credit reports exclude credit card information, although they will note if you have outstanding loans you're currently paying off.
The PRBC consumer credit report is one alternative data product that's easy to obtain. All you have to do is sign up on the PRBC website and link your utility, phone, and bank accounts to the service. PRBC uses one of the strongest encryption methods out there, so its security architecture is one of the best in the credit industry. In addition, the service is completely free to use and you can access your report whenever you want.
Do lenders accept alternative credit reports?
Alright, so you get an alternative credit report - are lenders actually going to consider it? There are two things you should remember:
First, according to the Equal Credit Opportunity Act, if you provide a business with alternative credit information, they need to consider it when making their decision. So, you could revisit the lender that denied you because you have no credit history and ask them to take a look at your PRBC report.
Second, there's been a lot of buzz lately about alternative credit data. Many lenders are encountering the problem of assessing people with no credit histories - most of whom are millennials, which will have considerable buying power in the years to come. For example, Bankrate noted only 33 percent of millennials own a credit card, meaning many Gen Yers are walking through life with small credit histories or none at all.
Overall, remember that lenders have an incentive to extend credit to you. They just want evidence proving that you're not the type of person take out a loan and fail to repay it. If you want to learn more about alternative credit reports, read more here.