No Credit Score? That Doesn’t Mean You’re a Huge Risk

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Research shows most people without an active credit file aren't the huge risk lenders fear they might be.

Credit bureau Experian estimates that 64 million American consumers don’t have a traditional credit score.

They’re often immigrants, people with no recent credit, or college grads with little to no credit history, CNNMoney says. Does that make them a huge lending risk? Banks might say yes, but for millions of them the answer is probably no, according to research by VantageScore.

VantageScore — whose scoring model was created by major credit bureaus Experian, Equifax and Transunion — claims to provide an alternate credit score for 30 million to 35 million of those who are currently in credit limbo and lack a FICO score, the one most commonly recognized by lenders. It does this by looking at two years of credit history along with alternative data such as rent and utility payments, CNNMoney says.

Nearly a quarter of them are “actually prime or near-prime credit quality — excellent candidates for mainstream lending products,” VantageScore’s website says.

“The largest groups of unscoreable consumers hold professional jobs or are retired, more than 40 percent are homeowners, and income distribution is in line with the consumers who do have scores,” CNNMoney says.

Some lenders are adopting this credit scoring model, but the most popular one is still FICO, which takes the traditional approach of only looking at people who have had active credit accounts in the past six months.

If you are denied credit, you might try asking which score was used and whether the lender would consider trying VantageScore. You should also take a look at the video below, which has advice for building credit that virtually any lender will recognize. While the video is geared toward college grads, the advice applies to everyone:

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