Build Credit the Fico Expansion Scheme

There is a huge market of potential borrowers in America who have no credit score, estimated to be around 25% of the population. Without a credit score it is difficult to obtain credit unless it is through secured credit cards or sub prime credit cards. People may find it difficult to obtain a mortgage or auto loan, or face higher insurance premiums and higher interest rates. This is a huge sector of the population and Fair Isaacs, responsible for Fico credit scoring, began to address this in 2004 when it introduced the Fico Expansion scheme.

The aim of the scheme is to allow responsible payers who have not traditionally used credit, the opportunity to build a credit score compiled based on other payments than credit payments. Typically immigrant populations, certain ethnic groups, the young, and the recently widowed or divorced, find themselves without a traditional credit score, yet in many cases are responsible citizens who pay all their other bills in a timely fashion without running up debts.

Comparable scoring methods to the Fico score were compiled based on utility payments, lease payments, pay day loans, and deposit account records. The same criteria were covered as in the Fico scores such as the length of payment history, size of payments and timeliness of payments. The first ventures were through Vantage Score and Next Gen. With the signing of the fourth credit bureau PRBC as a partner with Fico, the Fico Expansion score has become more established as the PRBC method scores to the same model as Fico using scores of 350 – 800. Mortgage companies will use a PRBC score to assess an applicant’s credit worthiness and accepts what are termed ‘non traditional mortgage credit reports’.

Not all lender’s are as yet willing to use the Fico Expansion scheme scores, but as they look to tap into the market of millions of new customers who currently do not typically borrow, the scheme is likely to catch on much more. Often those who have not used credit simply chose not to enter a market associated with spending what one does not have, and preferred to use cash instead. Unfortunately too many aspects of American life are affected by not having a credit score that those without one can be left in a disadvantageous position, and the Fico Expansion score is there to address that.

Consumers can choose to now build their own alternative credit score through using PRCB services and know that Fico will approve this, and that some lenders will pull the reports and make an assessment based on this alternative credit score, and that mortgage companies are willing to do so. After all if someone goes through life paying all their bills on time but choose not to have a credit card to do so on, they are as worthy of good credit and mortgage offers as those who have used the more traditional way of building credit through using credit.

Thus the Fico Expansion scheme will, as it becomes more established, help creditors to find worthy borrowers, whilst allowing new borrower’s access to lenders willing to look beyond traditional scoring method.