January 30, 2017

Startup Offers Fair Credit Score Alternative

Read more about Fair Credit

Establishing credit is one of the most important things that people can do when they're getting their financial footing. Being able to prove that you're creditworthy has always been a challenge for international students and younger borrowers because there isn't enough history for lenders to approve their loans.

There are many reasons that having good credit is important. Your credit score is checked in a lot of instances outside of a traditional bank loan:

  • Interest on a car loan
  • Ability to buy a house
  • Renting an apartment
  • Getting a new job

If you’re trying to rent, don’t be surprised if your potential landlord asks to check your credit. No one is going to rent to you if they don’t believe that you will make all your payments. Even a potential employer has every right do conduct a background check. Want to know what’s included on that background check? You guessed it, your credit history. The problem is that traditional credit reporting doesn’t work for everyone. Credit Kudos is a new UK company with the goal of fixing that.

The Problem with Credit Reporting

Traditionally, there have been three reporting agencies that lenders can use to check your credit: Transunion, Equifax and Experian. These agencies use similar metrics to determine your credit score. The factors they take into account include:

  • Open credit card usage
  • Payment history
  • Negative credit remarks (bankruptcies, collections)
  • Average age of credit
  • Number of accounts
  • Hard credit inquiries (credit cards, loans)

Traditional credit reporting doesn’t take a complete financial picture into account. It certainly doesn’t look at your spend patterns nor all of your assets and habits. Nor is it effective for international students who are creditworthy but don’t have the history to prove it using the three reporting agencies.

What if There Was a Different Way?

The problem with the traditional ways of establishing credit is just that: they’re traditional. They all use the same methods of coming up with a credit score, finding out the lines of credit you have open, and proving to lenders that you are a worthy borrower. There are a whole bunch of ways to prove that you are worthy of a loan that’s outside of a traditional credit reporting agency. Some of those factors include:

  • Transaction history
  • Income
  • Expenses
  • Financial assets
  • Spending habits

What if there were a credit agency that checked your complete financial picture so that you could get a loan that you need? Especially if you’re in a position where the traditional modes of checking your credit won’t make you eligible for a loan? You might get your first job out of college and need a car loan to commute to work. Or simply to rent your first place, you need your credit checked.

Introducing Credit Kudos

Credit Kudos is a revolutionary way to check your credit. It’s an advantage for both lenders and borrowers. The goal is to paint a complete financial picture that looks beyond the three traditional agencies for examining credit history. Credit Kudos is a four-step process to give lenders a complete financial picture on potential borrowers:

  1. Log into the loan application sent from a Credit Kudos link or lender
  2. Approve or reject the potential lender from having access to your financial picture so that you remain in control throughout the entire process
  3. Use the Credit Kudos secure login portal to link your financial accounts so that lenders can see a credit picture of yourself that goes beyond the three traditional reporting agencies
  4. Your transaction history, spending, saving, assets, habits and finances are analyzed to determine whether you are creditworthy for the loan you are applying to receive

That’s it. It’s as simple as clicking a link that’s sent directly to your inbox to apply for a loan that you would like to receive. Once you click on the loan, you can decide if the lender can access your information. This is unlike any other credit process. Once you grant approval, the lender can view a snapshot of your finances to determine if you’re worthy of a loan.

How It’s Different

Credit Kudos is the first app and program that allows lenders to send an application link directly to potential borrowers. Those borrowers can then choose whether or not to share their information. The power remains in their control the entire process. If they decide to let the lender view their information, then it sets a new standard for a financial picture.

At the press of a couple buttons, the lender can see a view of the borrower’s online accounts, spending, assets, savings and patterns that goes much further than a traditional credit score. It’s a total financial picture that is unmatched when it comes to ease and versatility for potential borrowers who have always had a tough time securing lines of credit.

Who It’s For

Credit Kudos is a great option for people who would have difficulty securing a loan through the traditional reporting methods. A lot of people don’t have a great credit history or the ability to take out loans, and some have fraudulent activity on their credit reports that will hurt their scores. There are countless people who will find Credit Kudos appealing:

  • Students
  • International students and workers
  • People recovering from bad credit
  • People with incorrect activity on credit reports

Credit Kudos operates under the premise that traditional credit reporting is broken. Until they came along, there was no way for lenders to view a complete financial picture except by going through a lengthy and complicated process of viewing authorized and printed bank statements.

Many people who see themselves as creditworthy don’t have the history to prove that they will repay a loan. The three reporting agencies are prone to errors and a credit score doesn’t tell a complete picture. There are a lot of people who have the finances available to take out a loan, and Credit Kudos sets out to solve the problem with a couple of clicks.

Advantages to Lenders

Until now, there were numerous potential borrowers who would have to be denied. They might be an international student or a young person who doesn’t have a strong credit history. In the past, the person might have to bring along a cosigner or might have to go through a cumbersome process of authorizing printed statements.

Credit Kudos allows lenders to instantly view a potential borrower’s complete financial picture. They allow the borrower to authorize data directly from their bank accounts over a secure server. You can use Credit Kudos’ underwriter portal or the JavaScript plugin for your own application process.

It’s the first time that gathering this much information (income, spending data, habits and applications) has become this fast and easy. It opens up a whole new world of potential borrowers. This creates the ability for younger borrowers and international students to get on their feet and build careers. It can also build a relationship with a new bank.

All in All

Credit Kudos is breaking the traditional mold when it comes to credit reporting. It is especially useful for international students and lenders. For many people, traditional credit scores will still work, but this opens up many new possibilities for a group that is worthy of credit lines and now has the means to prove it.

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