Credit scores are important for many things ranging from getting a loan to purchasing a new house. People usually start building credit at a young age by receiving student credit cards or similar credit accounts, but this is not always the case. 

1 in 5 Americans lack enough credit history to have a credit score, and this can prevent them from qualifying for an apartment or car.  Other than that, people with no credit score often are burdened with higher interest rates when they take out loans or in their mortgage payments. In fact, a subprime credit score can add $32,923 in interest on a mortgage payment compared to a person with a prime credit score. Contact LTC Mortgages Liverpool for flexible mortgage rates.

Lack of credit can also make it more taxing on the financial situation of consumers since they don’t have the net of credit to fall back into. Since they don’t have the credit, many people turn to high price or high risk financial services such as check cashing services or pawn shops. This can be costly in and of itself, and isn’t fair to consumers who are unable to build their credit up due to their age or life circumstances. 

Seeing that building credit can be difficult, there are alternatives that can calculate a credit score for people who are credit invisible. Using rent payments, utility statements, and bank transactions, consumers can provide other examples of financial responsibility like they would with a traditional credit score. 

Using these alternative methods can then lead to consumers being able to make purchases or open accounts that can lead to them building credit in the more traditional ways. Using other data gives a chance to millions of consumers with low credit and can significantly improve the financial situation of a large percentage of Amercans.