Alternative Data Like Cell Phone Bills Can Help Your Credit Rating

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Alternative Data Like Cell Phone Bills Can Help Your Credit Rating
As an increasing number of credit bureaus and lenders embrace the use of alternative data, such as cell phone
and rent payments, it will become much easier to build a credit history.
However, if more credit scoring companies begin using alternative data, such as cell phone
and rent payments, it could help more consumers build a credit history and borrow money.
In fact, the CFPB estimates that nearly 26 million Americans have no credit history with a national consumer reporting agency, making them “credit invisible.” Still another 19 million have an outdated or spotty credit history
that is not adequate to produce a credit score under most models.
“Alternative data from unconventional sources may help consumers who are stuck outside the system build a credit
history to access mainstream credit sources,” said CFPB Director Richard Cordray in a CFPB press release.
The CFPB inquiry is certainly not the first attention to alternative data for credit score calculations.
Additionally, the Fair Isaac Corporation recently introduced FICO Score XD, a scoring system
that uses cell phone bills, cable payments and property records.

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