What Is an Alternative to a Credit Report?

A credit report details the credit actions of an individual in the past, so that current lenders can get a good idea of the potential borrower's risk and trustworthiness. Credit reports do not record every credit account ever opened by the borrower -- there is typically a cutoff date so the report only lists credit extending back seven years. But within this limit the report provides detailed information that helps lenders make decision about how to offer credit and what interest rates to charge. Some borrowers with less-than-healthy credit are eager to find alternatives to using their credit report.

Not Using Credit

The issue of using a credit report is easily sidestepped if borrowers simply switch to paying with cash instead. Of course, the cash strategy does require concessions. Buyers must keep to a strict budget to save up for larger purchases, and cash purchases are not particularly feasible for items with price tags above several thousand dollars.

Other Credit Information

A single credit report may contain negative information, but if a borrower believes that one report does not detail his financial position accurately, he can try to convince a lender to check with one of the other credit bureaus. Or, if the lender has the resources, it can check other factors including the borrower's current income and assets. Sometimes a high income can be more important than a good credit report in the eyes of a lender.

Credit Scores

Credit scores are derived from credit reports, but can also be thought of as a useful alternative. Many creditors will look only at a credit score to make quick decisions about lending. This can help borrowers who have a high score but whose full credit report may detail past actions that would affect lender perceptions negatively. The different credit rating agencies each issue their own credit scores, which may vary depending on the formulas used to create them. Thus, a borrower's score from one agency may be higher than the score from another.

Payment-Based Reports

Payment-based reports and scores use alternative financial factors instead of credit to help create a credit score. The Payment Reporting Builds Credit score is one of these alternatives. It takes into account such things as child care payments and utility payments so that people with little credit or bad credit can still qualify for loans.