How to improve access to credit for people with low scores

Over the past several years - more or less since the start of the recession - the importance of having a good credit score has really come to the forefront for many consumers. Unfortunately, though, millions of Americans don't have the luxury of a good score, and that creates something of a vicious cycle because that also effectively locks people out of being able to get new credit going forward.

For this reason, there have been calls for those with minimal or even non-existent credit histories to get better access to loans and credit cards, and those have been increasing in volume more recently, according to a report from the Providence Journal. One of the biggest issues that people face when they're trying to build a positive credit history is that they can't get approval for any kind of financing in the first place, which locks them out of being able to even start that history off on the right foot.

What can be done?
Consequently, some experts have called for non-bank financial institutions to broaden their efforts to advance credit to these slim-profile people, at reasonable terms, as a means of helping them start to navigate toward a healthy score potentially for the first time in their lives, the report said. Improving that kind of access could not only serve to bring more prospective borrowers to the market, but also give people a healthy foundation of knowledge for how to handle their accounts correctly over time.

Certainly, other efforts are being made in this regard these days as well, the report said. Many companies are starting to use technology to determine creditworthiness beyond something as simple as a traditional credit score, which only takes into account history related to credit payments. Some are even using social media information to determine whether a person can be reliably considered a good investment in this regard.

Indeed, the kind of alternative credit scores that are making their way into the market these days - including those from PRBC - may help to paint a more complete picture of how much risk a person actually constitutes. These scores are based not only on credit payments, but also how they've handled paying their monthly bills for things like utility, cable, cell phones, and the like. This can be very informative in terms of helping people to find access to the credit they may need.

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