Why is alternative credit important?
The term “alternative” or “non-traditional” credit refers to the type of bills you pay each month such as rent, utilities, insurance and any other recurring payment obligations (i.e. payments for obligations other than “debt”) that are not reported to the major national credit bureaus, Equifax, Experian and TransUnion.
If you don’t have a credit score with the major credit bureaus, and you make on-time monthly payments to these alternative monthly accounts, your alternative credit file may help you obtain credit with financial institutions or service providers that uses alternative sources of credit information.
What does the LAW say about alternative credit information?
Section 202.6(b)(6) of the Equal Credit Opportunity Act (ECOA) is a Federal law, enforced by the Federal Trade Commission (FTC) that states:
To the extent that a creditor considers credit history in evaluating the creditworthiness of similarly qualified applicants for a similar type and amount of credit, in evaluating an applicant's creditworthiness a creditor shall consider: (i)The credit history, when available, of accounts designated as accounts that the applicant and the applicant's spouse are permitted to use or for which both are contractually liable; (ii)On the applicant's request, any information the applicant may present that tends to indicate that the credit history being considered by the creditor does not accurately reflect the applicant's creditworthiness; and (iii)On the applicant's request, the credit history, when available, of any account reported in the name of the applicant's spouse or former spouse that the applicant can demonstrate accurately reflects the applicant's creditworthiness.
The law is pretty clear that you have the right to present any information that demonstrates your creditworthiness, but the law is not clear about exactly how the creditor is required to “consider” the information.
How can the eCredable AMP Credit Report® help me?
If you have little or no traditional credit and no credit score, an AMP Credit Report and AMP Credit Score may help you show any potential creditor that you have a verified history of on time payments of your monthly financial obligations, from sources that are considered mainstream throughout the financial industry.
If your credit file could use a little help, your AMP Credit Report may help to offset negative history, showing the creditor a more complete picture of your credit history by highlighting your verified history of on-time payments, especially if your monthly financial obligations are from sources that are considered mainstream throughout the financial industry. Especially in today’s economic climate, bad things happen to good people. By using your alternative credit file to show a more complete credit profile, your creditor may better understand the circumstances which created that bad mark against your traditional credit file.
Your AMP Credit Report is laid out in an industry standard format that creditors are familiar with. It can be used by the creditor in underwriting and accessed electronically for credit scoring or other purposes. You are entitled to use your AMP Credit Report as a stand alone report, or as a supplement to the bill payments contained in your Equifax, Experian, and TransUnion credit reports.
Do all creditors use alternative credit information?
Almost all creditors use Alternative Credit Information in one form or another. There is a variety of information collected by a variety of companies falling into the category of Alternative Credit Information, but it’s very difficult for the consumer to know what the lender is using behind the scenes. If the Alternative Credit Information is being used for making credit decisions, the information must conform to all the rules and regulations spelled out in the Fair and Accurate Credit Transactions Act. At eCredable, we believe in complete information transparency, which is why the AMP Credit Report allows both consumers and lenders to have total transparency over the information being used in the AMP Credit Score.
How can I improve the chances that my alternative credit will be considered?
First, you must take care that you always make your bill payments on time. It is important that you can show as much positive payment history as possible when building an alternative credit report.
Second, present your alternative credit to potential creditors in a manner that that makes it easy for them to consider. Building an alternative credit report in a format that the creditor can use, verified by a source that creditors know and trust, can help your creditor streamline their alternative credit verification process. Your AMP Credit Report will provide a creditor with on-line access (with your permission) to your alternative bill payment history, verified by a source that is well known and established in the credit reporting and verification industry, and presented in a format that the creditor is used to working with every day. AMP Credit Report verifications are conducted by one of the premier credit reporting and verification companies in the country. eCredable’s verification provider's staff is FCRA certified, and all investigations and verifications meet or exceed the guidelines of Fannie Mae, Freddie Mac, HUD and FHA.
Third, time your verification and AMP Credit Report order with your credit event. Just like with traditional credit, creditors will usually want to see the most current picture of your credit possible. You should place your verification order so that your AMP Credit Report is completed within as few days as possible of presenting it to your creditor.
What steps should I take in building alternative credit profile with eCredable?
Join eCredable and select one of our two plans:
- AMP Connect Plus allows you to link up to 8 different types of eligible online accounts (like utility and telecom payments). This is the most cost effective way to build and maintain an accurate AMP Credit Score,
- AMP Connect Basic allows you to set up your profile completely for free, but you will need to pay to have your accounts verified at the point in time when you need to use your AMP Credit Score.
Note: Lenders do not accept payment history that has not been verified either automatically by linking online accounts, or by having the information manually verified.
- Enter ALL the bills you pay into MY ACCOUNTS.
- Link all of your eligible online Accounts for automatic monthly updating.
- Make sure that you record payments to your un-linked monthly Accounts each month to ensure accuracy of your estimated AMP Credit Score.
- Use our free AMP Credit Score tools. You can see where you stand today by checking your estimated AMP Credit Score displayed in your online account. See how you can improve your AMP Credit Score right now using the AMP Credit Score Estimator tool. eCredable cannot improve your AMP Credit Score – only YOU can improve your AMP Credit Score. If your AMP Credit Score isn’t where it needs to be, use the AMP Rate Watch to see how your Score might improve over time.
- 6. If you are ready apply for a credit offer in the eCredable Marketplace you may need to order a manual verification of your unlinked Accounts. Your AMP Credit Score is created by using all the accounts that have been either manually or automatically verified in your AMP Credit Report. See more about verifications at http://www.ecredable.com/resources/faqs/verifications.
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