Can I Add My Good Payment History on a Private Loan to My Credit Report?

About 50 million Americans have no credit history but have regular payments that they meet, according to information at the Microbilt Corporation website. Some alternative credit agencies exist that allow consumers to self-report payments to build credit. Although reporting successful payment of an informal or private loan between friends or family might seem like a crafty tactic to improve your credit, this information is unlikely to be accepted by an agency.

Identification

Self-reporting payments to an alternative credit agency does not mean you can add whatever information you like. A self-reporting agency, such as PRBC, usually only accepts payment data related to utilities, rent or a contractual obligation, such as a cell phone or insurance plan. PRBC must be able to verify the accuracy and legitimacy of the information, which would be difficult to do with a private loan between two individuals.

Alternative to Self-Reporting

Instead of self-reporting to the credit bureaus, you can go directly to lenders. People without a credit history sometimes bring in old receipts and canceled checks for monthly bills, such as rent, to prove their creditworthiness. Lenders, however, will probably only factor nontraditional data into a credit application if you lack a credit history with the major bureaus.

Are Alternative Scores Worth It?

Reporting a private loan to the credit bureaus would be out of the question -- even minor lenders cannot afford the monthly subscription costs and equipment required by the major bureaus. Self-reporting services charge between $20 and $30 per month to report one bill. The credit you build with these services, however, is not nearly as widely accepted as the traditional FICO score. In 2010, there was a push to include nontraditional data in credit scores. The FICO Expansion score, for example, includes information from PRBC databases.

Tip

Even if you decide to report a private or other nontraditional payment to a self-reporting agency, Dr. Don Taylor, columnist for BankRate.com, recommends a secured credit card to start building your traditional credit report. Secured credit cards are far easier to get than the standard unsecured credit card, because they require collateral on the line of credit. Secured accounts report to the credit bureaus and can turn into an unsecured line if you build a track record of using the card responsibly.