For consumers with no credit score or a thin credit file, eCredable offers a different way to gauge creditworthiness.
ECredable is an alternative credit reporting agency that uses data that credit bureaus typically don’t look at, such as on-time payments for phone and utility bills. It gives customers a rating similar to an academic grade.
The company's premier offering had been an unsecured credit card — one that does not require a deposit upfront. Customers used their eCredable rating to apply for that card, which in turn let them build a traditional credit history with at least one of the major credit bureaus.
However, that partnership has ended. Founder Steve Ely says the company is in talks with other potential partners. The company website also has a marketplace of other products designed for credit-challenged customers, but none uses the eCredable rating to evaluate applicants.
Until a new partnership makes an unsecured card available through eCredable, it makes more sense to save your cash and simply use a secured card or credit-builder loan to boost your credit profile.
How eCredable works
ECredable’s grading system evaluates risk in much the same way that traditional credit scores do, but using accounts that traditional scores usually overlook.
A $19.95 sign-up fee covers a year of automated reporting from up to eight eligible online accounts. Once you link accounts on eCredable’s encrypted site, it downloads up to two years of past payment data and then continues to pull information each month. That payment history goes into your letter grade.
However, not every bill you pay each month will be eligible. Mobile and landline phones, internet, utilities, and cable or satellite TV accounts are likeliest to work.
Accounts that aren’t eligible for automated reporting — because they’re not online, or they don’t have an agreement with eCredable — can still be used. But you pay an additional $19.95 per account for one-time manual verification, and the data gets calculated into your grade for only 45 days.
Ely says it generally takes four accounts in good standing to get a B, and five (including rent) to get an A. Rent can't be automated, so if you don’t score a B with automated accounts only, you’ll likely have to pay for manual reporting of rent to boost your grade.
How eCredable and the major credit bureaus differ
With eCredable, you opt in and data is furnished at your request — you are the client. You won’t have an eCredable grade unless you pay to have one, and you determine which accounts go into your file.
You don’t opt in to traditional credit reports and scores; they’re automatically built from your use of existing credit, and most of them overlook the accounts that eCredable uses. The client is the lender or card issuer that checks your credit history for risk factors when deciding whether to extend credit to you.
ECredable's grade isn't meant to be a permanent alternative to credit scores, but rather a steppingstone to establishing them. The site also offers advice and tools, such as payment reminders, to help you build your on-time payment history and boost your grade.
What we recommend
Because there currently is no unsecured credit card offering, and the other marketplace partners don't rely on your eCredable grade, we don't recommend you pay for this alternative score. Instead, use that money to pay for one of these options:
Secured credit card: With this type of card, you have to place a deposit as collateral. After six months of paying on time and keeping balances low (30% of your limit or less), you will likely qualify for an unsecured card. If you close your secured account in good standing, you'll get your deposit back.
Credit-builder loan: These loans hold the money you borrow in a savings account and you get the funds once you’ve fully repaid the loan. This can act as forced savings, helping you to build an emergency fund. And having multiple kinds of credit — for example, a loan with regular payments in addition to a credit card — can build your credit score faster than having only one.
You could also become an authorized user, which costs nothing. You just need to find a family member or friend willing to add you to their credit card account. But it doesn't boost your credit as much as an account of your own, and not all issuers report authorized user activity to the credit bureaus.
Updated June 28, 2017.