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 typically reported to the major national credit bureaus, Equifax, Experian and TransUnion.
eCredable helps you report some of these accounts to some of the National Credit Reporting Agencies (NCRAs) to help you build or enhance your credit history. The accounts you can report using eCredable include gas, water, power, waste, mobile phone, land line, internet, cable and satellite TV. These accounts will direct impact your FICO Score® 8 (and newer) and your VantageScore® 3 (and newer) credit scores. Other types of credit scores may also benefit from having this information available in your credit files, but these two scores are very popular with lenders that use your credit score when evaluating your application for unsecured financial products like credit cards, personal loans, student loans, and auto loans.
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. This is precisely why eCredable took the approach of only reporting your “alternative credit” accounts to NCRAs who have agreed to include it in your core credit file – not a separate credit database that might be used for other purposes (like creating unique credit scores that are only used in unique circumstances).
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 we are committed to reporting your information to be included in your core credit file at the participating NCRAs. When you order a credit report from a participating NCRA, you will see all the “alternative credit” accounts that you have asked us to report on your behalf.
What steps should I take in building my alternative credit profile with eCredable?
Join eCredable and enroll in eCredable Lift®:
- eCredable Lift® allows you to link up to 9 different types of eligible online accounts (like utility and telecom payments).
- Link all of your eligible online Accounts for automatic monthly updating.
- eCredable will initially report up to 24 months of history, based on the amount of history available from your Service Provider web site. On the day of the month that you linked your account, we will login next month on your behalf and retrieve the current payment history. We will record this information in our credit file, to be subsequently reported to participating NCRAs.
- We report new information to participating National Consumer Reporting Agencies (NCRAs) twice a week. After you link an account, you should wait a few days before ordering an updated credit report to give the participating NCRAs time to update your credit file with this new information. Some credit reports include a free credit score, but this is up to the participating NCRA. After you have successfully linked an account, we’ll reconnect with your account on a monthly basis to retrieve updated payment information to report to participating NCRAs.
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