New Credit Report Services Help Consumers With No Credit History Finance A New Car
More than 50 million Americans – that is 25% of all adult consumers in the country – are not part of the credit reporting system that is so crucial to obtaining things like mortgages and auto loans, according to research by Fair Isaac, an innovative credit reporting industry group. Whether by choice or by circumstance, these people don’t use credit cards, finance a new car, take out loans, or complete other transactions that can be reported to the three major credit bureaus that track individuals’ creditworthiness. That means those people have no credit history on file for lenders to consult.
Without a credit history, it is nearly impossible for lenders and automobile financing agencies to judge an individual’s creditworthiness. The problem is that you need credit to get credit, and when these debt-free consumers decide to finance a new car, request a loan, or apply for a credit card, they have little chance of qualifying for good interest rates. Without a track record to consult, lenders are often unwilling to risk taking a chance on a consumer who may or may not be able to pay back the loan.
If this is you, don’t despair. Credit report bureaus have realized that a lack of information may not be an accurate measure of an individual’s capacity for payment. That’s why they are looking for alternative solutions to this problem.
Fair Isaac Company now offers the FICO Expansion Score. This new version of the 300-850-point credit report gives a lender the possibility to look into non-traditional credit information – data that is not collected or analyzed by the three major credit bureaus – that may indicate you are responsible with your payments. For example, the lender may be able to judge your creditworthiness based on how often you use overdraft protection in a checking account, your rental payment history, and overall payment patterns.
Anthem scores, a new option for those with little or no credit history, also looks at non-traditional data. However, with this service, you’ll be asked to submit information like canceled checks, utility bills and other personal finance info. The company will then verify this information and the resulting score will be sent to the lender. Because the Anthem score is a new concept, it is not widely accepted yet, but it’s definitely a step in the right direction – and it may be your only option if you are trying to buy a new car with no credit history.
For additional information and tips on how to build your credit history, read BuyingAdvice’s “Automobile Financing Tips For Consumers With No Credit History”.
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