Credit Reports Need to Include Alternative Data

Right now, millions of Americans are working on improving or maintaining their credit score and are able to do so with monthly credit card payments, etc. However, there are also millions of Americans who are equally as financially responsible as those with good credit, but they aren’t able to even get a credit score at all. 

These individuals are most often those who are recent immigrants, recently divorced or widowed, Hispanic or African American, those who are young or new to credit, and those who use mostly cash or debit cards. 

Regardless of the fact that many of these individuals pay their monthly bills on time, they aren’t able to get a credit score because traditional credit reports don’t include the kinds of data that are available from their financial histories. 

Alternative data such as utility payments, phone payments, rental payments, and banking transaction history, can and should be included on credit reports so that every American adult has the opportunity to be counted and accurately scored. 

Currently, 1 out of 5 Americans does not have enough credit history to be scored according to traditional credit reports. However, using alternative data would mean that 90% of them could finally receive a score, and almost half of these individuals would score as prime or near prime borrowers. 

Alternative data could be the key to financial advancement for millions of Americans.

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Pluralist

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