New Scoring Model Aimed at Those With No Credit Score
Written by: Kristy Welsh
Getting a loan, credit card, or even a cell phone is predicated on your credit score. It seems that your entire life revolves around that magical 3-digit score. But what if you don't have a credit score? According to a recent survey, over 60 million people do not have a credit score, which means these people can not take advantage of using and applying for lines of credit. Scoring companies see this trend and are feeling the need to adjust the way they evaluate these types of consumers. If you are person who does not have a credit score, read on to find out more about this new credit scoring model and if it will help you.
Introducing CreditVision Link
Credit reporting agency giant, TransUnion, recently announced a new credit scoring model that is says will score 95 percent of the adult population with as little as a consumer's address and their checking account information. This new scoring model, called CreditVision Link, it the latest using what the industry calls "alternative data" information which is not factored into traditional scores, such as FICO. Using this type of data, CreditVision Link is able to give risk scores to 60 million people who do not have a credit score using the traditional scoring models.
How CreditVision Link Works
CreditVision Link analyzes a person's personal information and financial accounts. To be scored, you must have a verifiable address and one trade line. The trade line can be a checking account or something as simple as a magazine subscription. The following items are also evaluated to come up with your score:
- Tax and deed records
- Checking and debit accounts
- PayDay loans
- Furniture rental payments
- Address changes
TransUnion found that by looking at these alternative items, consumers who would have been categorized as sub-prime borrowers could now be classified as prime borrowers. Thus improving their access to credit and better interest rates.
As far as checking account behavior, CreditVision Link gives weight to someone who does not bounce checks and has not had an account closed by their financial institution. Changes in addresses is also evaluated. People who do not move frequently (more than once a year) are seen as better credit risks. These are both areas not looked at by FICO or other traditional scoring models used by lenders.
Who is Using CreditVision Link
As with any new scoring model, the million dollar question is who is using this to evaluate credit worthiness? TransUnion would not disclose the names of creditors with which it tested the model but said its target is large-scale lenders that already have sophisticated systems in place. CreditVision Link would be used to supplement their processes with the aim of expanding their lending portfolio to those traditionally un-scoreable consumers.
As stated by TransUnion's senior vice president of alternative data services Mike Mondelli, "CreditVision Link is intended to be a supplement to traditional scoring models, not a replacement." Consumers can request their CreditVision Link alternative data report, but the score itself isn’t available for purchase.
There are a lot of credit scores out there, and you never know which one your creditors might use to review you, so it helps to check your scores regularly to get an idea of where your credit stands. You can get your free credit reports once a year from AnnualCreditReport.com or you can check out our list of recommended credit report companies. If you are one of the millions who do not have a credit score, CreditVision Link can help you apply and get approved for credit.
Having said that, our advice is for you to start to build up your credit and establish a credit score. Our site is loaded with information on just how to do that with hundreds of informative articles. Might we also suggest visiting our discussion boards where you can get excellent advice for free.