Lenders Look Beyond Credit Scores to Gauge Who_s a Risk

As the headline says, lenders are using alternative-scoring methods to assess customer risk. Lenders, if they ever were, are no longer relying solely on FICO scores to determine creditworthiness. Companies are turning to alternative scoring information to get a more complete picture of credit applicants. From Time Magazine’s Time.com site:”The experience we have seen in the past year only reiterates that you need to do more than just look at a credit score when making a loan,” says Larry Goldstone, chief executive of Thornburg Mortgage. “We have never had as much confidence in credit scores as the rest of the industry.”Companies that provide so-called alternative credit information say their business is booming, even as the rest of the lending industry continues to shrink. Banks once sought out such information as rent-payment histories to assess whether to lend to individuals who lack a credit score because they may never have had a credit card or mortgage and don’t have enough credit history to generate a rating. These days, more and more banks are using the supplemental information, even with customers who have a credit score, in an effort to lower loan defaults.