It Could Get Easier To Secure A Mortgage With This New Credit Scoring System
If you have little or no credit, it really may not be an issue soon.
Millions more Americans could get access to a mortgage this year if Washington agency’s alternative data system catches on as a means to establish a new type of credit score is successful.
The Consumer Financial Protection Bureau is expected to announce on Thursday it will attempt to use data culled from people’s everyday spending habits — like paying rent and making cell phone payments — to create a new type of credit score that could be used to give more card users a leg up into credit markets.
“People with little or no credit history, or who lack a credit score, have fewer opportunities to borrow money in order to build a future and any credit that is available usually costs more,” Richard Cordray, the CFPB’s director, said in prepared remarks sent to The Post.
“They often are caught in a Catch-22, unable to get credit because they have not had credit before,” he added. “They cannot seize meaningful opportunities, such as borrowing to start a business or buy a house.”
The use of so-called “alternative data” to facilitate such lending has been on the rise around the world.
The CFPB is looking for public comments through May 19. After that, the agency could loosen existing regulations in order to allow the use of the additional data.