There’s nothing that will make you feel more secure than a good credit score. Credit scores are often the basis of banks and major lending companies’ decisions about whether they are able to give you financing options. If you are looking into making major purchases such as buying a house or a car, you need to be financed by a lender who is confident in your ability to pay your dues.
However, it may be difficult to land a good deal with these lending companies if you have a bad credit score. In fact, you may think that there are no viable options for you when you’re stuck with poor credit. How do you rise above this? Truth be told, there are other great ways for you to bump up your credit score, and one of them is through alternative credit.
What is alternative credit?
This type of credit refers to all your payments for your regular expenses. Some of the common examples are your phone bills, internet connection, as well as water, electricity and rental bills. Alternate credit can also consider all your regular subscriptions.
This kind of credit is considered something that can be used when you want to find financing options. It is recognized through the Equal Credit Opportunity Act (ECOA). You can present this information to the lender when you have a non-traditional payment history. Lenders should have to take this kind of credit into consideration. They cannot turn down a borrower who presents factual information about alternate credit reports.
In fact, having alternative credit can save you money, if you are able to take the right steps. In this post, we will be looking into four ways this type of credit can save you money.
4 Ways Alternative Credit Can Save You Lots of Money
- Presenting your alternative credit report can give you better financing options.
Now, people do not need to be alarmed with a poor credit score. Alternate credit reporting can also be used to present to a lender to have good financing options. Often, the concern of people who have bad credit scores is having high-interest rates that seem to be unmanageable if they take the agreement.
Through proper reporting, borrowers can now have equal opportunity to have the similar financing options as long as they present these non-traditional means of credit reporting. All they would need is a company who is able to verify their payments through an income verification process, such as Associates Home Loan.
- Many credit offers are flexible and can adjust according to your capacity to pay and preferences.
This type of credit offer is highly flexible and can be customized according to your needs. Most people pay subscriptions by looking at plans that fit their preferences and payment capabilities. Some examples of these are payment for TV cable connection and internet. Users can pick the plan that they like the most based on the offer and total price.
This can save you money while helping you improve your credit score, as you can adjust subscription plans according to what you can pay. By adjusting your payment plans, you are able to meet your dues on time, which will reflect in your credit reporting.
- Being able to present this type of credit shows you have a detailed payment history
Did you know that some lenders would prefer people who can present a detailed payment history compared to someone who tries to live debt-free?
In fact, some banks and credit card companies would be hesitant to lend to a person who always pays in cash because they have no proof that this person can pay bills and other expenses. Having an alternate credit will save you from this trouble by keeping a record of all your regular payments. Once your payments are verified, financing companies will be able to lend you money as the alternate credit reporting is able to give them a good payment history.
- Alternate credit is a good option for self-employed and small businesses
Another reason that alternate credit can save people money is in situations where people are self-employed or if they have a small business. Self-employed people do not usually have bank statements or paychecks to present, which cannot strengthen their case to be financed by big lenders.
Through alternate credit, they are able to show proof of their payment capabilities even without statements or recorded paychecks from the bank. This also goes for small businesses to show proof that they have paid off a large purchase.
Most borrowers would have the impression that alternate credit won’t be able to help them with their financing needs. Through the understanding of these simple ways, people can now leverage their alternate credit to get the best of their financing options.