Glossary

Alternative Credit Data

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Alternative Credit Data vs. FICO Credit Report

Many individuals are accustomed to the phrase “credit score”. This commonly refers to the FICO credit score. FICO stands for Fair, Isaac and Company, which is a company which focuses on data analytics for credit scoring. These credit scores are used by lenders around the United States to determine the creditworthiness of the borrower in hopes that the borrower will repay the lender. The FICO credit score was introduced in 1989 and has come to be the gold standard for credit scoring in the lending industry. A traditional credit score, such as the FICO credit score, uses an individual’s previous credit history to determine future credit worthiness. 

Some factors that go into a credit score include: Payment history on credit, credit utilization (the more an individual spends on their credit limits, the riskier they are determined to be), length of credit history on active credit lines, number of credit inquiries, as well as how diverse an individual’s credit is.

There are many who have a difficult time obtaining credit due to events that made them unable to pay back credit on time, lowering their credit score. Others have simply never had credit before, and thus their credit score is either non-existent or they have a poor credit score and are likely to be denied for credit by traditional lenders who solely rely upon the FICO credit score when determining credit worthiness. 

How Alternative Credit Data Offers a Solution

Alternative credit data offers another view on an individual when determining their credit worthiness. Some lenders leverage consumer-permissioned data such as access to bank statements, payments on utilities and rent, as well as public records, and alternative financial services to seek a different angle on a customer’s history. This allows lenders to approve individuals who lack previous credit history as well as those with unforeseen issues with traditional credit from banks and credit unions. 

Lift Credit offers no credit check loans. No FICO credit report is used, allowing individuals to apply for credit using alternative credit data to help open access to credit to more individuals who otherwise lack credit options.

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