New FICO Score – What You Need to KnowPresently, it’s estimated that there are approximately 53 million Americans who do not have credit scores or credit reports. Noting this, they also don’t qualify for credit access, making it difficult for these tens of millions of people to secure housing, utilities, a car – even something as seemingly simple as a cellular phone. No credit history – or a lack of favorable credit history – and most are out of luck. But according to a recent report in the Wall Street Journal, this could all be changing. The report states that FICO is close to releasing a new scoring formula that’s specifically designed to help high-risk consumers, as well as consumers without credit history or a credit report, access credit. The score has yet to be officially named, but the WSJ states that it’s already being tested by 12 credit card companies and expected to be rolled out on a widespread scale by the end of 2015. While it likely won’t open the door to new credit lines for all 53 million consumers that don’t have credit scores or credit history, it’s believed it will benefit about 15 million.
New FICO Score: The BasicsMuch of this new FICO score is still a mystery, but there’s a lot that we already know about it. Here’s a look:
- The big thing that this new FICO score will include are payment history of cable bills, phone bills, electric bills and gas bills. It should go without saying that these aren’t normally things that are included in a credit score. It will also factor in things like address changes, the thinking being that the more frequently a consumer changes residencies, the less trustworthy they are.
- There are believed to be other factors that will be included in the new FICO score which can be learned from the LexisNexis database.
- Standard FICO factors such as payment history, debt, credit history and types of credit would also still be used in this new model.
- The scoring scale will still range from 300 to 800, but it’s estimated that about one-third of all newly scored consumers, under the new scoring model, would have a score over 620, which is generally considered the line where lenders either approve or deny.