Alternative credit could help with big life decisions

Access to purchasing many things in life are tied to a traditional credit score. As a result, consumers who have poor, “thin,” or no credit often struggle to achieve life goals they’ve set because lenders often dismiss applicants who do not possess a traditional credit score. This is despite the fact they are responsible and have the desire and ability to pay back their debts.

Unfortunately, traditional credit scores are limiting, shutting out millions of adult consumers in the U.S. to gain access to and enjoy things other Americans are able to more easily access. This year’s COVID-19 pandemic has further widened the financial divide associated with credit scores. The good news is there is a solid solution in an alternative credit score for people who cannot get a traditional credit score.

Here are six ways alternative credit can help.

1. Being able to plan for major life decisions

Consumers often rely on credit cards or personal loans to help pay for the things in life they want to pursue. Making life decisions in general usually has some sort of financial aspect attached to it, such as planning a wedding, starting a family, or expanding a family. Having credit options widely expands the ability to move forward with life goals. In this respect, an alternative credit score is a tangible way to open up the ability and have the access to reach many of life’s opportunities.

Essentially, good credit is the path to living comfortably and, in many ways, a level of financial freedom. In the year 2020, perhaps more than any other when contactless payments and online shopping is preferred, people need access to forms of electronic payment to live comfortably or have access to items, such as holiday gifts, they want to buy.

2. Securing a coveted job

Numerous employers factor in an applicant’s credit standing when determining the right candidate for their open positions. Under U.S. federal law, they cannot pull a person’s credit without their written permission but they might look unfavorably on job candidates who do not have a strong credit history. Pursuing and achieving an alternative credit score can strengthen a job candidate’s overall credit history and create a positive credit profile employers will see when they run credit checks.

3. Gaining the flexibility to rent a better apartment

Consumers not yet ready or able to buy a house might have the goal of improving their housing situation. This might mean moving into a better neighborhood, relocating to another state, or simply seeking a larger living space. Having alternative credit can enable them to demonstrate a favorable impression to prospective landlords when their credit is run. In the end, this greatly opens up their housing options.

4. Having the ability to purchase a car 

For decades, financially responsible consumers with little or no credit have been unfairly charged exorbitant interest rates when they tried to buy a car. This puts them in a challenging situation because usually people who want cars desperately need reliable transportation. With unfavorable loan terms, this created a situation where there were few options or no affordable way to make a car purchase.

With alternative credit scores, the tide is changing and consumers without traditional credit scores can now demonstrate to car dealerships and auto loan lenders they can and do routinely – and responsibly – pay their financial obligations. Not to mention, better automobile insurance rates can be achieved as well.

5. Pursuing entrepreneurship by opening a business

People may have fantastic business ideas but lack the financial resources and backing to bring these entrepreneurial dreams to reality because they lack credit. A hopeful entrepreneur who pursues building their credit the non-traditional way can eventually build their creditworthiness to the point where lenders may consider approving small business loans to help seed a startup.

6. Qualifying to buy a house

Many people with no credit or a “thin” credit file typically find they have difficulty planning for the future. For people who want to buy a home, no credit history or a weak one becomes a huge barrier. Unfortunately, lenders see this as an obstacle, ultimately preventing consumers from achieving their dream of homeownership. Some reports indicate about 67 million people in the U.S. lack the credit needed to secure a mortgage.

Obtaining an alternative credit score can be a game-changer for millions of consumers who want to buy a home. Increasingly, lenders are looking more positively at consumers who can demonstrate they can make consistent, on-time payments for their monthly bills, such as rent, utilities, phone, internet, and other types of financial obligations – essentially bills they are paying anyway.

As a result, underserved consumers can now enjoy the ability to buy a home much like people who rely on traditional credit scores to get a mortgage. For these consumers, it all starts with getting an alternative credit score.

Connect can help you build your credit score

MicroBilt Connect, formerly PRBC, is fully committed to helping consumers build a healthy credit score. Since 2005, our solution has enabled consumers to demonstrate their creditworthiness to lenders and creditors, helps them to gain access to credit and favorable loan terms. As a result, they often find a better ability to achieve their life goals and be freed from the limitations that poor, "thin," or no credit history places on them because of how traditional credit scores are calculated.

How it works is consumers pay their everyday expenses, such as utilities, phone, and internet bills, on time. Any payments made are tracked in real-time. Over time, consumers can demonstrate their creditworthiness which enables them to gain access to credit, along with loans with more favorable terms.

To learn more about how Connect can help you get started on the path to a better credit score, contact us today.

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