Bad or no credit history? FICO has a new partition for you

Bad or no credit history? FICO has a new partition for you -

Millions of Americans have a way to prove their solvency in the coming months through a new easier credit score of be developed by Fair Isaac Corporation, better known as FICO, which include other data. The new formulation has been in the works for over two years and is designed to give people who have no credit history, but pay their other bills on time the opportunity to earn credit scores that can help to qualify for loans in the future. According to the Wall Street Journal, FICO develops its pilot program to help some 15 million Americans who do not currently have a FICO credit score to countdown to a credit history. In total, about 53 million Americans have no credit scores. This is due either to choose not to use any form of credit at all, or because of an adverse financial event, such a bankruptcy or foreclosure, affected their finances so it cost them the ability to receive loans from conventional sources, such as a bank.

What are the replacement data is used to calculate FICO scores?

The new FICO score will be provided to people who otherwise would have difficulty getting approved for credit scores due to low or no FICO three major credit bureaus (Equifax, Experian and TransUnion). Customers with the new FICO score will be able to demonstrate solvency by making regular payments on time and their cable, cell phone and utility bills. These elements are not normally calculated after accounting for credit scores. The new score will be formulated by the data and the history of payments received from Equifax and LexisNexis, which will track payment history on non-related elements debt.

What is this new score for people with no credit history

Customers who make their utility payments on time and in full will be able to qualify more easily for credit cards and car loans - Something that can be difficult without extensive credit history. While lenders often approve loans for customers with a credit score above 620, more than a third of the 15 million Americans who are supposed to be helped by this expansion have FICO scores below this number. Lenders will now be able to assess potential customers based on their credit history pay off other types of loans, even if their traditional FICO scores are below 620. Currently, the new FICO score will be visible for 12 of largest emitters of US credit cards, well beyond the expansion in the future is possible.

A schedule for full deployment of the new program has not yet been announced, but it is in a pilot phase. Check back on our credit report monitoring blog for more information on this story and other credit-related news.