The Truth About Alternative Credit Scores

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The Truth About Alternative Credit ScoresIf your traditional credit score is too poor – or too thin – to qualify you for a loan, credit card, or lease, an alternative credit score could get the job done. And provided the lender reports to the big three credit bureaus, it can help you establish or repair your traditional credit score, too. But as with traditional scores, there are multiple alternative credit scoring models out there. Get the facts about who generates alternative scores, how they’re calculated, and the pros and cons of using them.

Difference between traditional and alternative credit score

The difference is in the type of data used to calculate the score.

A traditional credit score is based on loan, credit card, and credit line history, including:

Traditional credit scores also take into account:

  • Number of hard credit inquiries
  • Accounts in collections or default (e.g., installment loans, credit cards, medical bills, utility bills, cell phone bills, etc.)
  • Public records (e.g., tax liens, garnishments, foreclosure, bankruptcy).

It is this traditional type of score that has been used for years by the big three credit bureaus – Experian, Equifax, and TransUnion – to generate FICO Scores and VantageScores.

An alternative credit score is based on other types of data, such as:

  • Rent payments*
  • Utility payments
  • Cell phone payments
  • Cable payments
  • Checking account history
  • How often you move
  • Property records
  • Education
  • Occupation
  • Shopping habits
  • Social media

*Rent payments are not exclusive to alternative credit scoring. All three of the credit bureaus will add rent payment information to your credit reports if they receive that data. That said, rent payments are not used when calculating all FICO Scores; they are only worked into FICO 9 and FICO Score XD. They are also included in VantageScores.

Who generates alternative credit scores

FICO via Equifax

Of all the credit scoring models, FICO is used by lenders most. But to generate a traditional FICO Score, you need:

  • At least one credit account that is at least 6 months old AND
  • At least one credit account that has reported to the credit bureaus within the past 6 months

So it was exciting news when FICO – in partnership with Equifax and LexisNexis Risk Solutions – launched FICO Score XD for consumers who do not meet the requirements to generate a traditional FICO Score.

FICO Score XD is based on:

  • Landline, mobile, and cable payments
  • Public records and property data
  • Existing credit bureau data

After 6 months of scoring under the XD model, FICO upgrades you to a traditional FICO Score.


As one of the big three credit bureaus, TransUnion generates both traditional FICO Scores and VantageScores. But in 2015, it launched its own alternative scoring model – CreditVision Link.

CreditVision Link is based on:

  • Checking account history
  • Payday loan history
  • Property records
  • Tax and deed records
  • Existing TransUnion data

It also relies on trended data, which CreditVision explains like this:

“Traditionally, credit scores have incorporated one snapshot in time of a consumer’s history of credit usage. Trended data incorporates past history connected over time to indicate risk level based on the trajectory of a consumer’s debt balances, spending and actual payment amount….

“Trended data assets leverage an expanded view of credit behavior data on each consumer that includes up to 30 months of historical information on each loan account, plus payment history, amount paid vs. minimum due, and the total amount borrowed over time, for a more holistic view of a consumer’s credit behavior and trends.”


Calling itself The Alternative Credit Bureau, FactorTrust operates much like one of the big three credit bureaus, basing credit scores on loan performance and public records. You can also request a credit report from them and request an investigation if you find an error in your report.

Where FactorTrust differs from the traditional credit bureaus is in its use of real-time bank account details that allows it to track earning, spending, and saving behavior.

As explained by Lending Times’ Allen Taylor:

“Every new application or inquiry is treated as a new consumer without performance data. Once an application is accepted, performance data supporting the application is then collected. Factor Trust’s data comprises of application and tradeline information, and, with the help of these data, the company is able to get comprehensive knowledge about consumer spending patterns and the types of products these consumers use. Other important information like stability, payment history, and income stream provide additional insight into financial habits of consumers.”


This alternative credit scoring company is currently only available to those in the UK, but its unique spin on alternative credit scoring makes it worth a mention, as it (or something like it) could become available in the U.S.

Aire incorporates into its model what it calls an Interactive Virtual Interview. This 3-minute “machine-learning solution” collects information about your profession, education, lifestyle, and financial situation.

Like FactorTrust, in order for an Aire credit score to be generated, you must first submit an application for credit through one of its lending partners. And like the traditional credit bureaus, you can request to see the data Aire has collected on you and initiate an investigation if you should discover a mistake.

Happy Mango

This alternative credit score relies on your financial accounts and personal referrals.

  • You link your financial account(s) to Happy Mango. They track your earning, spending, and saving, assigning a credit score to each of these categories.
  • You ask family and friends to vouch for you. They are called trustees and they generate a referral credit score.

Though you can sign up for free, as of this writing, there aren’t a lot of lenders offering loans through the Happy Mango marketplace. In fact, there is just one – Spring Bank – with two others listed as “coming soon.”


When you sign up for eCredable AMP Connect, you can start building an alternative credit score based on the utility accounts you link to your profile, including:

  • Cell phone
  • Landline
  • Internet
  • Cable
  • Satellite TV
  • Gas
  • Water
  • Electric

While you won’t find every utility company eligible for linking, thousands are available, including AT&T, Verizon, Time Warner, and DirectTV.

There are two types of membership:

AMP Connect Basic

  • Free
  • Requires manual updating of accounts
  • Charges $19.95 per updated account every time it is verified

AMP Connect Plus

  • $19.95 per year
  • Automatic updates available for up to eight accounts (included in cost of the plan)
  • $19.95 for accounts that must be manually updated every time it is verified (e.g., rent)
  • Unlimited credit reports and score updates

Unfortunately, as reported by Bev O’Shea for NerdWallet, this may not be a good investment of your money right now. eCredable used to offer an unsecured credit card based on your eCredable score, but that partnership is no more:

“Because there currently is no unsecured credit card offering, and the other [eCredable] marketplace partners don’t rely on your eCredable grade, we don’t recommend you pay for this alternative score.”

Instead, O’Shea recommends putting that money toward a secured credit card or credit builder loan.


Founded in 2005, PRBC stands for Payment Reporting Builds Credit. Signing up is free, as is your access to your PRBC credit reports and scores. Its credit score is based on information gathered from both traditional and alternative sources:

  • Credit cards
  • Mortgages
  • Bank accounts
  • Utilities
  • Insurance policies

Note of caution: PRBC lists jewelry retailers, furniture stores, and electronic retailers among the lenders that use the PRBC credit score. But it is never a good idea to apply for credit from these kinds of lenders. The interest rates are not worth it and these types of loans will do nothing to build your traditional credit scores, as they likely don’t report on-time payments to the big three bureaus. On the contrary, the only type of credit you should ever seek is the kind that reports to Experian, Equifax, and TransUnion to help you build your FICO and VantageScores.

Car dealerships are also listed among those that use the PRBC score. While they may report to the big three, watch out for high interest rates on these loans. And only consider them in comparison with other lending options (i.e., shop around first).

Finally, PRBC lists landlords among those that rely on its credit score. That can absolutely be helpful, but there are plenty of other rent-reporting services out there that you can use.

Rent reporting agencies

Since rent payments are considered in both alternative and (some) traditional credit scores, it is probably a good idea for you to take advantage of these types of services. There are a number of rent reporting agencies to choose from.

Companies that use social media credit scores

A couple of years ago, the hype surrounding social media credit scoring seemed to point to a growing trend destined to infiltrate the credit scoring world. But while there are companies that use social media to help determine creditworthiness (Kreditech, Kabbage, Lenndo), it hasn’t really taken off as expected.

As explained by deBanked’s Sean Murray:

“The WSJ recently reported that lenders are backing away from social media data because it’s becoming harder to tap into and because of the potential regulatory consequences under fair credit laws…

“Companies like Kabbage have seemingly softened their stance on the value of social media anyway. ‘Who your social circle is, or whether you play ‘Mafia Wars’—we haven’t seen that as very valuable,’ Kabbage CEO Rob Frohwein said to the WSJ.”

Who uses alternative credit scores

They’re generally used by lenders who want to do business with consumers who have subprime credit. If they want to rely on the traditional credit bureaus for an alternative score, lenders may check your FICO Score XD or CreditVision Link. Other alternative credit scores may only be used if you apply for credit through that company’s lending partners (e.g., Aire, Happy Mango).

Pros and cons of alternative credit scoring


  • You get credit for positive behavior that isn’t included in traditional credits scores, like on-time utility payments and bank accounts in good standing. They may also be a better reflection of how creditworthy you are now, not years ago when you made the mistakes that are negatively impacting your score today.
  • You may be approved for loans and leases that you wouldn’t otherwise be able to qualify for.
  • You get to build your traditional credit scores when your lender reports to the big three bureaus. (Do not do business with a creditor that does not report to Experian, Equifax, and TransUnion; building up your traditional scores is the end goal.)


  • The credit you’re able to get with an alternative credit score will likely be through a subprime lender with high interest rates that you may be not be able to afford.
  • Some lenders who use alternative credit scores may not report to Experian, Equifax, or TransUnion (e.g., jewelry stores, furniture stores, electronics retailers), which means it won’t do anything to help your traditional credit scores.
  • Alternative credit scoring raises regulatory concerns. The Consumer Financial Protection Bureau (CFPB) is looking into it, concerned about privacy issues, the ability of consumers to ensure accuracy of information, and the potential for discrimination against certain groups.

What we recommend

If you have no credit or thin credit, instead of signing up on sites that generate their own alternative credit scores, we recommend you focus on your FICO Score XD and CreditVision Link through TransUnion. To establish the kind of credit that will show up on these reports, you can:

If you have bad credit, you can take the same actions outlined above to rebuild your credit through the big three. And if you haven’t already, look into the DIY credit repair process; it’s free and less time consuming than you might think.

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