Don't Have a Credit Score? You Could Be in Luck

Credit bureau TransUnion today announced a new credit score that it says will score 95% of the U.S. adult population with as little as a consumer’s address and checking account information. The score, called CreditVision Link, is the latest addition to a growing pool of scores using what the industry calls alternative data — financial information not factored into so-called traditional scores, like many of those from data giant FICO.

CreditVision Link is designed to assess the likelihood that a consumer will go 90 days without paying a new, non-mortgage account within 12 months. Through the data it uses to determine that, CreditVision Link gives risk scores to 60 million people who have no credit scores using traditional models, TransUnion says.

CreditVision Link accomplishes this by analyzing people’s financial accounts in greater detail. To be scored, consumers have to have a minimum of a verifiable address and one trade line (and that can be as simple as a checking account or magazine subscription). The score looks at data such as property, tax and deed records; checking and debit accounts; payday loans; furniture rental payments; and address changes, among other things. TransUnion found that 23 million people considered non-prime consumers by traditional scoring models are classified as prime with CreditVision Link, improving those consumers’ access to credit, potentially with better interest rates.

Understandably, consumers may be concerned about how their moving habits or checking accounts could affect their current credit scores, but CreditVision Link is intended to be a supplement to traditional scoring models, not a replacement, said Mike Mondelli, TransUnion’s senior vice president of alternative data services.

“We’re talking about people who move a lot in a six-month period,” Mondelli said, adding that moving about once a year is “relatively normal behavior.” The problem with frequent moving, he said, is it makes it difficult for companies and creditors to establish a billing relationship because of people constantly changing their addresses. “People can’t find them. they can’t bill them, they can’t get paid. If they’re moving that frequently, chances are they’re going to be a bit of a higher risk, all things equal.”

Which Checking Account Details Matter?

As far as checking account behavior goes, consumers have to worry about a negative impact on their credit only if they “bounce almost every check they write” or their financial institutions have forcibly closed their accounts, Mondelli said. While that data has the potential to negatively impact some consumers, Mondelli said people who already have good credit are generally not people who move several times a year or have their checking accounts forcibly closed.

Another way this score stands out is how far back it looks into a consumer’s account history. For example, a traditional scoring model looks at your credit utilization (how high your credit card balances are compared to your credit limits and your loan balances relative to their original amounts) at the time the credit score is pulled. CreditVision Link looks back up to 30 months into the account history, allowing potential lenders to see your utilization pattern and average utilization over time. It also shows payment amounts, potentially rewarding people who pay their credit card balances in full with higher credit scores, which traditional models do not do.

The question that always comes up after the announcement of a new credit scoring model is, “Who’s using it?” After all, a credit score is meaningful only if someone is using it to determine whether to approve you for credit you want. TransUnion would not disclose names of creditors with which it tested the model but said its target is large-scale lenders that already have sophisticated risk assessment systems in place — CreditVision Link would supplement their processes with the aim of expanding their lending portfolio to traditionally unscorable consumers.

The score scale mimics other popular ranges: 300 to 850, with a higher score indicating the consumer is a lower risk to potential creditors. Consumers can now request their free CreditVision alternative data report (it’s different from the TransUnion credit report you can get for free through AnnualCreditReport.com), but the score itself isn’t available for purchase by consumers (just potential lenders at this point). There are a lot of credit scores out there, and you never know which one your creditors might use to review you, but many of them are based on the same information, so it helps to check your scores regularly to get an idea of where your credit stands (just make sure you’re comparing the same model against itself over time). You can get free credit scores from dozens of sources, including two of your free credit scores on Credit.com, with updates every 14 days.