08/07/2012 02:33 pm ET

How to Borrow Money to Buy a Car (Even If You Have No Credit History)

Since credit reporting first appeared about 40 years ago, lenders have relied on these credit scores to tell them whether or not they should lend to someone. Chances are, you've been approved or denied a loan because of your credit score.

But millions of Americans can't even dream of applying for a mortgage, car loan, credit card, or some other kind of loan because they may don't even have a credit history! It's a "Catch-22" situation -- you need a credit history to get a loan... and you need a loan to get credit history.

If you're not in this situation, imagine how hard it would be to try to build a credit history when no one will give you credit. If you're IN this situation, it probably feels like you have an up-hill battle just to get those essential-to-life loans that other people take for granted.

Fortunately, things have changed and now consumers have access to more choices, including the ability to be eligible for loans that they might not have been able to get approved in the past!

That's because alternative credit reporting agency like eCredable are providing a service to consumers who don't have the credit history they need to obtain a car loan or more.

Here's how I see alternative credit reporting agencies work: eCredable captures information to build up a more complete picture of your credit history. They do this through verified bill payments that collectively contribute to a more accurate alternative credit report. So the traditional credit report that most banks look at might report "No Credit History," but eCredable can still prove to prospective lenders that you are a highly trustworthy person who pays their bills on time even if you haven't borrowed money through a loan.

This is really exciting news for the millions of Americans who would not be able to otherwise get a loan because they haven't had a loan in the past and therefore have no credit history.

So I was really excited to see the latest press release from eCredable describing a new partnership between eCredable and RoadLoans. Now, consumers who don't have a credit history can still get a car loan from RoadLoans if they have a good rating through eCredable.

And the best part is: This arrangement gives "no credit history" consumers with a loan so they can start building up their credit history. It's a "back door" to establishing your credit history and building a credit score that you might not normally get through some of the more traditional lenders.