There are few things as quietly damaging as a bad credit score. No credit score doesn’t stop one from doing the normal things they do throughout the day. Instead, no credit score stops one from making big purchases and going through hard moments with reasonable rates. Credit determines loan interest rates on cars, homes and even emergency loans.
The issue with many Americans and their credit score isn’t that they’re unreliable, but that they’re invisible. An American with no accounts, a recent immigrant, a divorcee, or even someone who just prefers debit, all are creditless. These same people can be entirely reliable though, paying rent, telephone bills, and utilities consistently.
What some new alternative data and scoring sources are doing is taking this into consideration. Now it’s not just credit cards and major bills, but utilities, rent, and telephone bills that can make a difference. These new sources aren’t overtaking typical credit models, but they are working alongside them.
In practice what this means for the average American is a little bump in their credit score. 10 to 25 points can make a big difference for those who are struggling with credit. More importantly though are all the Americans whose credit would become visible. Up to 6.5 million Americans could become scorable with utility and telephone data alone.
This is the impact of more considerate scoring on the average American. So many Americans today are uninterested in investing in typical credit accounts. These alternative data and scoring sources allow that to remain the case while still bringing people out of invisibility.
