Daily Real Estate News  |  April 22, 2008  |   Alternative Credit Scores Gaining
About 70 million of U.S. adults don’t have a traditional credit score. Many of them are recent immigrants, new college grads, and newly divorced or widowed women.

Financial firms are trying to fill that void with new products and services that cater to those who don’t have established banking relationships by collecting data on credit card payments, cellphone accounts, and rent payments. Among the firms offering these alternatives products are credit report processor First American Credco, data provider LexisNexis, and credit bureau TransUnion.

While this approach to credit screening works for some smaller lenders, there are still some big ones that won’t consider this kind of credit scores. For instance, Bank of America will look at rent and utility bills when screening customers for a loan, but it won't use ratings based on that information.

Part of the reason for their reluctance is the continuing refusal of Fannie Mae and Freddie Mac to consider alternative credit scores at this time.

Source: Business Week, Ben Levisohn and Brian Burnsed (04/21/08)