New FICO score expected to aid 'thin credit' consumers
April 1, 2015
SAN JOSE, Calif. (4/2/15)--Fair Isaac Corp. (FICO) is expected to announce a new metric to determine consumer credit quality this week.
The new score will pull information on payment history for utilities such as cable, phone, electricity and gas from an Equifax database. It also will incorporate address changes, which could indicate financial stability, from a LexisNexis database (The Wall Street Journal April 1).
Roughly 15 million of the 53 million unscorable Americans already can be scored using the alternative data, said Jim Wehmann, FICO executive vice president of scores. FICO and 10 credit-card issuers have been testing the new score since November, and the score should be rolled out nationally by year-end.
Lenders are challenged to provide credit to consumers who don't have scores because they are considered riskier than subprime borrowers, or those who have low FICO scores.
Supporters of scores based on data other than debt payments say consumers should be able to benefit from paying their bills on time. This includes people who rarely use credit or who are new to the credit environment, such as students.
However, 40% of the roughly 28 million with thin credit and no score have experienced a negative credit event such as bankruptcy or collection action. Another 25 million have no credit file at all.
An October TransUnion survey found nearly half of renters thought that paying rent and utility bills on time was reflected in their credit reports (News Now Oct. 23, 2014).