Credit bureaus want to score more Americans, by incorporating non-credit sources — timely rent payments, for instance — into their calculations.
Other credit-building companies, like TomoCredit and X1, make short-term loans underwritten against wealth or income rather than repayment history. Those loans then build a credit history, which becomes a credit score.Compared to someone with "very good" credit of between 740 and 799, someone with "fair" credit — between 630 and 689 — has to pay substantially more interest on their loans.
If a "credit invisible" person then ends up with a credit score that's very low, that can be worse than having no credit score at all,your car insurance rate — but in most states that allow insurers to use credit scores, the law specifically says that peopleSimilarly, having bad credit is worse than having no credit when you're applying for a job.
Having a subprime credit score also exposes people to some of the most predatory lenders in the industry."I have yet to see anyone go from credit invisible to a bad score," says Maitri Johnson, who oversees programs at TransUnion that incorporate rent payments into credit scores.All of these programs, so far, are opt-in. People who pay their rent on time are the people who try to improve their credit scores, or get a brand-new score that's reasonably healthy.
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