Credit Money Alternative Data History People Reports Applications

Credit reports and "credit scores" (a number summarizing one's credit report) are extremely important for Americans, because they are use for "everything from" (a wide range of things, including) housing applications, job applications, to determining insurance rates. Most people "build their credit history" (establish a reputation for how responsibly they use borrowed money) by having credit card accounts, car loans, "mortgages" (loans to buy a home), "student loans" (loans to pay for an education), and more.

However, some people do not use credit in these ways. They might be "wary" (untrusting) of banks and other financial institutions, or they might simply prefer to conduct their "transactions" (the exchange of money for goods and services) "in cash" (with paper and coin money). Or they might simply be young adults who haven't yet established a credit history. In these cases, not having a credit history results in a poor credit score.

People who do not have a credit history can present "alternative data" to show whether they "handle" (deal with) credit responsibly. This alternative data could include "rent" (money paid to live in an apartment or home) and "utility" (services like gas and electricity) payments, which are not normally reported to "credit bureaus" (the organizations that collect information for credit reports and calculate credit scores).

Lenders can use this alternative data to "assess" (make a judgment about) how responsibly an individual has paid back money in the past and determine that individual's "credit worthiness" (how likely one is to pay back money in the future and whether one should be lent money now).