Home > Credit Score > The New FICO Score: What It Means for You

Comments 8 Comments

If you’ve always maintained a strong payment history with your cellphone and cable bills and want a little credit for it, you may be in luck. Credit-scoring giant FICO just announced a new scoring model designed to give credit scores based on people’s payment history with their phone, utilities and other bills.

LexisNexis Risk Solutions and Equifax introduced the FICO Score XD to help lenders assess consumers who may not have a traditional credit history but have a strong record of paying non-credit accounts — things that are not in traditional credit scores. In the credit reporting and scoring industry, these people are called “credit invisibles,” and alternative credit scores like the FICO Score XD aim to make them visible to potential lenders.

For consumers who may be struggling to successfully achieve credit card approval, FICO Score XD uses alternative data to determine if they are creditworthy. This data tool evaluates phone, cable, utility payments and public records to generate scores on the same 300 to 850 scale used for standard FICO scores. (You can see what’s considered a good credit score on that scale here.) The alternative payment history on cable, cellphones and utilities is sourced from National Consumer Telecom & Utilities Exchange.

“Alternative data is a critical component and really a driver of financial inclusion,” said Ankush Tewari, senior director, Credit Risk Decisioning at LexisNexis Risk Solutions. “Banks and other lenders are able to expand their addressable market and grow their businesses by leveraging scores that are built on models utilizing alternative data.”

FICO isn’t the only one experimenting with alternative credit scores, and it remains unclear how many lenders will actually use FICO Score XD when evaluating credit applicants. There are dozens of companies with their own credit-scoring formulas, and these companies often have more than one scoring model (FICO alone has more than 50 FICO credit score formulas). That can make it difficult for consumers to understand their credit scores, because every score is different.

The good news is there are many ways to see your credit scores for free — you can get two free credit scores every month on Credit.com — but it’s important you don’t compare different scores to each other. The scales may be different (the FICO Score XD, for example, ranges from 300 to 850, but not all scores do), and the data and math driving the scores may be different, too. By tracking a specific credit score over time, you’ll see how your financial behaviors like payment history affect your credit.

If you don’t want to rely on the possibility of a lender using an alternative credit score in order to get credit, you may want to consider trying to establish credit with a secured credit card or a credit-builder loan.

Staying on top of your bills and keeping your finances under control are imperative to financial empowerment. You can view your credit score free of charge before applying for credit, an advisable measure. And be sure you know the basics when it comes to how your credit score is calculated.

More on Credit Reports & Credit Scores:

Image: Portra

Comments on articles and responses to those comments are not provided or commissioned by a bank advertiser. Responses have not been reviewed, approved or otherwise endorsed by a bank advertiser. It is not a bank advertiser's responsibility to ensure all posts and/or questions are answered.

Please note that our comments are moderated, so it may take a little time before you see them on the page. Thanks for your patience.

  • Jermaine Smith

    Honestly…who even cares anymore? My credit is solid; just purchased a home, have major cards with good limits, etc. But the process of getting to that point – let alone maintaining it – is such a *game*. The truth is, these companies have access to a truly absurd number of versions of scores – up to and including in-house calculations they manufacture.

    There’s no winning if you’re a consumer, because you can’t fight 40 different versions of your credit. If a company wants to find a way to approve you and give you a great rate, they will – but lord help you if they don’t want your business. It’s going to be an uphill battle if they feel like using the one version of your score that puts you into a different rate category. It’s a shame, and as another poster said, really needs better regulation.

  • Gadgetman

    Yes there should be a law where the agency has to you what score model they use.

  • Gadgetman

    Scores from Credit.com, Credit Sesame, Credit Karma are all useless because no lenders (banks, credit card companies) use FAKO scores, they us actual FICO scores that you have to pay for to get. It’s all a BS game and there is no such thing as a real free credit score. The only time you see your score for free is when you apply for credit and get denied. The letter they send will have the actual score, you can also ask customer service what credit report is used for example: Discover uses Transunion reports.

    • http://www.credit.com/ Credit.com Credit Experts

      Hi there. One of the free scores we offer is the VantageScore 3.0, which is a score lenders use. You can also get free FICO scores through some credit card issuers, if you’re a cardholder.

      • Gadgetman

        Ok I stand corrected but I have yet found any the uses VantageScore 3.0 because that score for me is pretty high 690+, which pretty proves my point in previous comments, if I knew which lenders uses that model then I would be applying to them because currently I’m getting declined on lousy store cards LOL!!!!

  • freefighter

    You’re absolutely right. We should be legally entitled to see these scores that have such an impact on our life. Not to mention we should see the formula that makes up each score.

  • R Lee

    I agree that consumers should have access to all of their credit scores, but with so many scores used by lenders …. why not simplify and reduce that number of scores, have a more uniform number of scores for specific types of credit, and eliminate the use of lenders developing and using scoring models developed and used by lenders. This way consumers can at least have a better idea of their scores and will not apply for credit thinking they qualify when they actually don’t , and penalize their report by adding an additional inquiry.

  • http://blog.credit.com/ Kali Geldis

    There’s a few things that could be at play here, so let’s dissect!

    First, there’s not just one FICO — there are many and your car financer/mortgage lender may have used two different kinds. For example, some car dealers use a special model that weighs your car payment history more heavily than your credit card payment history. The VantageScore is used in lending decisions as well as the FICO, just not with the lenders you used for the car and refi.

    The basics of good credit are pretty universal, which is why we recommend trying to work on the basics vs. getting lost in comparing scores. Also, not all credit scores use the same range. For example, a 650 in one scoring model may be equivalent to a 702 in another.

    Lastly, the score that’s being used matters, but so does the credit report. Your credit report may have some differences from bureau to bureau. For example, some creditors may not report to all three bureaus, so a credit score using a credit report that lists a credit card in good standing may be different from a credit score that uses a different report that lacks that account.

    Hope this helps!

Certain credit cards and other financial products mentioned in this and other articles on Credit.com News & Advice may also be offered through Credit.com product pages, and Credit.com will be compensated if our users apply for and ultimately sign up for any of these cards or products. However, this relationship does not result in any preferential editorial treatment.

Hello, Reader!

Thanks for checking out Credit.com. We hope you find the site and the journalism we produce useful. We wanted to take some time to tell you a bit about ourselves.

Our People

The Credit.com editorial team is staffed by a team of editors and reporters, each with many years of financial reporting experience. We’ve worked for places like the New York Times, American Banker, Frontline, TheStreet.com, Business Insider, ABC News, NBC News, CNBC and many others. We also employ a few freelancers and more than 50 contributors (these are typically subject matter experts from the worlds of finance, academia, politics, business and elsewhere).

Our Reporting

We take great pains to ensure that the articles, video and graphics you see on Credit.com are thoroughly reported and fact-checked. Each story is read by two separate editors, and we adhere to the highest editorial standards. We’re not perfect, however, and if you see something that you think is wrong, please email us at editorial team [at] credit [dot] com,

The Credit.com editorial team is committed to providing our readers and viewers with sound, well-reported and understandable information designed to inform and empower. We won’t tell you what to do. We will, however, do our best to explain the consequences of various actions, thereby arming you with the information you need to make decisions that are in your best interests. We also write about things relating to money and finance we think are interesting and want to share.

In addition to appearing on Credit.com, our articles are syndicated to dozens of other news sites. We have more than 100 partners, including MSN, ABC News, CBS News, Yahoo, Marketwatch, Scripps, Money Magazine and many others. This network operates similarly to the Associated Press or Reuters, except we focus almost exclusively on issues relating to personal finance. These are not advertorial or paid placements, rather we provide these articles to our partners in most cases for free. These relationships create more awareness of Credit.com in general and they result in more traffic to us as well.

Our Business Model

Credit.com’s journalism is largely supported by an e-commerce business model. Rather than rely on revenue from display ad impressions, Credit.com maintains a financial marketplace separate from its editorial pages. When someone navigates to those pages, and applies for a credit card, for example, Credit.com will get paid what is essentially a finder’s fee if that person ends up getting the card. That doesn’t mean, however, that our editorial decisions are informed by the products available in our marketplace. The editorial team chooses what to write about and how to write about it independently of the decisions and priorities of the business side of the company. In fact, we maintain a strict and important firewall between the editorial and business departments. Our mission as journalists is to serve the reader, not the advertiser. In that sense, we are no different from any other news organization that is supported by ad revenue.

Visitors to Credit.com are also able to register for a free Credit.com account, which gives them access to a tool called The Credit Report Card. This tool provides users with two free credit scores and a breakdown of the information in their Experian credit report, updated twice monthly. Again, this tool is entirely free, and we mention that frequently in our articles, because we think that it’s a good thing for users to have access to data like this. Separate from its educational value, there is also a business angle to the Credit Report Card. Registered users can be matched with products and services for which they are most likely to qualify. In other words, if you register and you find that your credit is less than stellar, Credit.com won’t recommend a high-end platinum credit card that requires an excellent credit score You’d likely get rejected, and that’s no good for you or Credit.com. You’d be no closer to getting a product you need, there’d be a wasted inquiry on your credit report, and Credit.com wouldn’t get paid. These are essentially what are commonly referred to as "targeted ads" in the world of the Internet. Despite all of this, however, even if you never apply for any product, the Credit Report Card will remain free, and none of this will impact how the editorial team reports on credit and credit scores.

Our Owners

Credit.com is owned by Progrexion Holdings Inc. which is the owner and administrator of a number of business related to credit and credit repair, including CreditRepair.com, and eFolks. In addition, Progrexion also provides services to Lexington Law Firm as a third party provider. Despite being owned by Progrexion, it is not the role of the Credit.com editorial team to advocate the use of the company’s other services. In articles, reporters may mention credit repair as an option, for example, but we’ll also be sure to note the various alternatives to that service. Furthermore, you may see ads for credit repair services on Credit.com, but the editorial team isn’t responsible for the creation or implementation of those ads, anymore than reporters for the New York Times or Washington Post are responsible for the ads on their sites.

Your Stories

Lastly, much of what we do is informed by our own experiences as well as the experiences of our readers. We want to tell your stories if you’re interested in sharing them. Please email us at story ideas [at] credit [dot] com with ideas or visit us on Facebook or Twitter.

Thanks for stopping by.

- The Credit.com Editorial Team