New Credit Score Covers Those with Limited to No Credit History

Credit Score for No HistoryImage credit to Andres Rueda via Flickr

As a consumer, your credit score is almost as important as your social security number or identification. Without a decent credit score, you could be denied an auto loan, may not be able to take out a mortgage, or be declined when applying for credit cards. If you didn’t have a bank account growing up, were never taught financial responsibility, and have avoided using or applying for credit cards your entire life, Experian has debuted a new credit score designed specifically for you.

This credit score is designed for the poorest of consumers, who live off the financial grid and do not have a credit score. Experian’s new credit score, called Extended View, takes the “under-banked” into consideration. It could bring as many as 64 million consumers into the credit score playing field; 20 percent of which will be considered to be prime borrowers and eligible for better rates. While a credit score is used to determine eligibility for loans, those with high scores are approved and those with low scores are denied, those with no score, like those new to the country or who live on a cash-and-carry basis, also find it difficult to qualify for a loan.

The Extended View credit score takes things into consideration which are not included in a traditional credit score, like payday loan replacement history, rental payment history, and other financial information which may be hidden deep in public records, like missed child support payments. Fifteen lenders are considering using the score, and although none of their names have been released, are sure to include both large and small lenders. The company claimed the score would be used by banks, credit unions, auto lender, phone and utility providers.

These new developments, like credit scores for those considered to be under-banked, are proof that lenders are becoming more interested in tapping into deeper wells of customers who may have previously been ignored. According to the Center for Financial Services Innovation, this group of people is considered to see a noticeable growth in the next few years. As the banks are becoming more and more unstable, individuals are growing increasingly wary of applying for credit and having a bank account.

The mathematical equation which determines the Extended View credit score takes three areas into consideration: mathematical calculations based on existing data, payment data from rental real estate and public record data. Many things are taken into consideration, including criminal histories, bankruptcy and eviction records. Their rental payment information is updated every 24 hours, and although the Extended View credit score is not available to the public, it will be in the near future. Once that happens, many people who were previously unable to apply for credit cards will now be free to use websites like eCreditCards.com to find the best cards for their limited credit histories!

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