There are many types of loans you can receive with your alternative credit score or by providing lenders your alternative credit score.
If your traditional credit score isn't all that great, you could pay an interest rate of between 10 and 13 percent on a car loan, according to Bankrate. That's pretty steep, especially if you're strapped for cash, but still need a vehicle.
If you make utility, phone, subscription and other payments on time, then your alternative credit score will reflect this positive behavior, possibly raising your overall credit rating. If this is the case, your interest rate may be as little as 4 percent.
Given that a good computer may cost upwards of $1,000, putting that much money down could leave you in a tight spot. Like furniture stores, electronics retailers are aware of this concern, offering people the chance to open lines of credit for purchases and rent-to-own equipment.
Before establishing such agreements, these businesses often check people's alternative credit history to see whether they pay utility, cell phone and other kinds of expenses in a timely manner.
Whether you want to replace a broken couch or buy a clean bed, furniture can be pretty expensive. Furniture retailers are aware of this, and enable cash-strapped individuals to obtain their goods through either rent-to-own agreements or by extending credit.
To reduce the interest rates on these plans, many reference alternative credit reports to see which customers are likely to pay them back.
Whether you want to finance a renovation or pay off medical expenses, a personal loan can help you pay for whatever irregular expense comes your way. However, obtaining one without a credit score can be challenging.
Some lenders view alternative credit ratings as good benchmarks for measuring people's creditworthiness.
Although it isn't a standard practice among loan officers, the home lending industry is beginning to see the benefits of referencing alternative credit scores.
Loan processors and underwriters know just how misleading poor traditional credit scores can be, and are therefore turning to more reliable metrics on which to base their decisions.
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