I find it hard to believe there are still millions of Americans that don't exist within our nation's credit-scoring system. Since credit has played an integral role in my personal financial life ever since High School, it seems practically impossible that one could live in our society without either leveraging the benefits of credit, or getting into trouble, at some point in time.
However, industry experts believe there are approximately 100 million adult Americans who have little or no credit history on file with any of the three major credit bureaus. That's about one-third of our entire population! Clearly, it's not so difficult to avoid the credit system altogether.
These individuals have somehow managed to live their lives without ever using credit cards, student loans, auto loans, or mortgages for either convenience or financing purposes. Whatever they've needed, they've paid for in cash. And I'm not saying that's necessarily a bad thing, but it can present a few problems down the road.
Can we infer from the previous statistics that these individuals don't exist in the system because they're not as credit-worthy as those who have utilized credit ever since they were of legal age (like me)?
To any mainstream lender, the answer would be a resounding "YES"! An individual without a credit report or FICO score would obviously not be considered a good credit risk. You may pay your rent, utilities, phone bill, and that painfully outrageous cable bill on time each month, but that won't get you very far when you're finally ready to buy your first home and you don't have several hundred thousand bucks sitting around in your savings account.
On the other hand, PRBC, which stands for Payment Reporting Builds Credit, is a relatively new credit bureau that aims to help responsible consumers who lack a traditional credit history prove their credit worthiness. Unlike the major credit bureaus, PRBC utilizes a non-traditional credit model that allows consumers to build positive credit history without going into debt. In fact, you can build your credit by simply paying the bills.
Here's how PRBC works in 3 simple steps:
- For a fee of about $30, you can start building your own credit report through PRBC
- You self-report your on-time payments for rent, utilities, phone and cable bills, insurance, and other contractual agreements to PRBC
- PRBC then verifies the payments and builds your credit report accordingly. FICO, the 100-lb gorilla in the credit-scoring world, has even partnered with PRBC to build a unique score called the FICO Expansion Score, which lenders can access to evaluate your credit worthiness.
Thirty dollars is a small price to pay to enjoy better interest rates and terms on a loan that you may not have even qualified for in the absence of a PRBC credit report. So, if you lack a traditional credit history and would rather avoid the possibility of falling into debt to prove your credit worthiness, PRBC may be exactly what you need to start building a positive credit profile today.
