Traditional Credit score vs. Alternative Credit
By Keith Bunn Jr.
March 3, 2013
It’s a Shame
It just kills me to hear people who are already debt free say that they are looking to go into debt to build a credit score because it's hard to get stuff without a score. Or someone who is already going through financial hardship say that they are going to get a "kind of" credit card because they were told by others that it will boost their credit score so they can get stuff. To me, that is just CRAZY!!! If I knew back then what I know now, there would have been no way I would have gone into debt. In my opinion, for anyone to say that they have to have a credit score to get anything they want today is just another way of saying that they believe all the lies and myths that are fed to all of us on a daily basis, and that's just sad.
What the FICO!
Let's briefly go over what a credit (FICO) score is. The FICO was developed in 1956 to help lenders figure out if you are credit worthy or not. Your past lenders will report whether or not your loan was good or bad to FICO and your score will be broken down based on 5 categories. 35% of your score is based on your payment history. 30% is based on your debt levels. 15% is based on the length of time you've been in debt. 10% is based on the type of debt you have. And the last 10% is based on any new debt. That information is then stored at the three credit bureaus we use today. Equifax, Experian, and TransUnion.
Based on that information, your credit score could be anywhere between 300 (bad) to 850 (excellent). But the problem is, every one of those 5 categories above is based on debt. In other words you can't have a credit (FICO) score if you're debt free. It is impossible! So what does someone do if they have never been in debt or has damaged credit because of some bad loans in their past or someone who is getting out of debt and their credit score is starting to disappear? Well there is something today that can help everyone in those situations, and it’s called Alternative Credit.
Alternative Credit is information that is NOT reported to the credit bureaus. It is NOT credit or debt based; it is payment based information, like your rent, utilities, child care, etc... any kind of payment that you are making on a regular bases for a minimum of 2 years or more and can be verified, can be used to established your credit worthiness.
So I'm guessing you're thinking, "How can I use Alternative Credit?" That's easy. There is a company called eCredable that can help you establish an Alternative Credit score. It’s called an A.M.P. Credit Rating. A.M.P. stands for All My Payments. And what eCredable does is, they take your 2 years or more payment information, verify it, and establishes a rating for you of A - F. A (really good), F (really bad). They will also help you by telling you what you have to do to establish the best rating possible. Now here is something important to remember. Every creditor is required by law to consider anything you present to them that asses your credit worthiness when they are using other forms of credit information, like FICO. That law is called The Equal Opportunity Act. If a creditor does not consider eCredable's A.M.P. rating as part of assessing your credit worthiness, it is a $10,000 fine per incident.
eCredable is a service, so you do have to pay to get your A.M.P. credit rating. If you're thinking, "I don't have to pay for my FICO score." Let me remind you that you have to go into debt and stay in debt to have a good to great FICO score. So in my opinion, with all the interest you have to pay while being in debt to have that good to great FICO score, you are paying far more to have and maintain a Traditional Credit score vs. what you have to pay to get and use Alternative Credit.
1) Do you believe that you have to have a FICO score to get things on credit, like a home?
2) Do you think Alternative Credit can be helpful for your situation?
3) What do you think of eCredable's A.M.P. credit rating?
4) Do you think you'll be looking into what eCredable can do for you?
5) Think as if you were the lender. Would you rather lend money to someone who has a lot of debt and has a FICO score, or someone who doesn't have a FICO score because they are debt free and makes all their payments?
I'd like to take this time to thank Steve Stewart from MoneyPlanSOS.com for helping me with the eCredable portion of this blog. I couldn't have done it without his help! Also, if you go to eCredable and use Steve's promo code "SOS", you can get an eCredable account for free! Thanks buddy!!
I'd also like to thank all my fans and followers from all my social media sites for their loyalty and patience. I know I haven't been on them much due to my kidney stone issues. The good news is that I'm going to have a procedure done tomorrow that will hopefully take care of all these issues. Thanks again!!
I hope my posts inspire you to look at what you’re doing financially and if needed, make some changes that will cause you to win financially. I also look forward to reading your views on any articles or postings that I may post. For more money news, facts and ideas, follow me on Facebook, or Twitter. Thank you!