One of the biggest complaints that many consumers have about the current credit scoring industry is that you are required to have credit in order to be approved for credit.
This means that, to some extent, you have to use debt in order to build your credit history.
Even though the point of credit scoring is to get a feel for how you deal with credit, many consumers are unhappy with the model. After all, there are plenty of consumers who don’t use credit cards, and pay for their cars with cash. They make rent payments each month, and utility payments. They pay their insurance bills on time.
They are responsible with their money, but many of the things they do aren’t reported to credit agencies. As a result, they end up unable to qualify for a loan when it really matters — like when they want a mortgage.
This is a company that looks at your payment history on a variety of accounts, and uses that to create a profile of payment behaviors.
No credit is needed with eCredable.
Do Any Lenders use eCredable?
With eCredable, it’s up to consumers to build a profile.
You pay to have your payment history verified with service providers, including insurers, landlords, and utilities. You can have your cell phone bill added as well. You provide eCredable with the information, and the company does the heavy lifting, verifying the information going back two years.
Then, you are assigned a grade, A through F.
It’s important to note that eCredable doesn’t keep track of your information on an ongoing basis. You have your payment history verified once, and then it can be used to apply for a loan with one of the lenders that work with eCredable.
It’s best if you use eCredable’s free tool to project where you are at for the most part, and only pay for verification if you are serious about applying for a car loan or a home loan.
Right now, eCredable is only working with two lenders: One for auto loans and one for mortgages.
However, the company hopes to have more lenders on board by the end of 2013. The hope is that more lenders will be willing to help consumers who can show that they are responsible with their money — even if they don’t use credit cards.
eCredable joins the ranks of alternative credit scoring systems.
There are different companies that are starting to use alternative methods (even FICO has a scoring product that isn’t as heavily dependent on credit) as consumers demand that their finances not be judged on a score that, by definition, requires them to take on debt to be considered desirable.
However, services like eCredable come with a price. It can cost up to $90 for you to get a compelling alternative credit workup from eCredable. And, while it might be worth it in the long run, some consumers might balk at the price.
So far, these alternative scoring models haven’t caught on very widely.
However, as more enter the space, and as consumers continue to ask for alternative scoring models, there is a chance that they will soon become the norm.