Fair Isaac (FICO) is testing a system that rates consumers who have no credit. The system will score people based on their payment of such items as utility, cellphone and cable bills.
The goal is to create a “credit score” for some of the 53 million Americans who don’t have a standard FICO credit score. The new score has the same range as the traditional FICO score: 300–850. Lenders can take the measure into account along with other factors to make a credit decision.
The change should make it easier for consumers who have no credit to get a loan or credit card, but that doesn’t mean that they’ll receive the same low-interest offers as do people who have a traditional FICO score, says John Ulzheimer, who is an independent credit expert.
FICO began to test the system during the first quarter of 2015 with 12 major lenders. The lenders are looking at the new scores for previous loan applicants “to understand how borrowers that were unscorable in the recent past would have scored in the new system,” FICO spokesperson Christina Goethe says. Goethe didn’t say when FICO’s alternative scoring system might be applied to more lenders.