Suze Orman TwitterSuze Orman FacebookSuze Orman YouTubeSuze Orman LinkedIn
View Blog & News List

What You Need To Know About New Alternative FICO Score

May 14, 2015 at 12:00 PM

For years I have pointed out how ridiculous it is that people who don’t have credit cards, but responsibly pay-as-they-go with debit cards and cash, are put at a severe disadvantage in our financial system. 

That’s because anyone who dares not to have a credit card likely doesn’t have a FICO credit score. And without a FICO credit score it’s all but impossible to get a regular credit card (a bit of a catch-22), or qualify for a mortgage or car loan, and it can even make it hard to rent a home. 

Well, there’s potentially good news on the way. FICO has created a companion to its standard scoring system. Instead of relying so heavily on credit cards, the new “alternative” score—it doesn’t have an official name yet -will evaluate data that includes your history of timely payments for: 

-Gas and Electric Bills

-Cable Bills

-Cell Phone and Landline Bills 

FICO will also use data that tracks your known addresses; the idea being that the longer you have lived in your current residence, the more stable your finances may be. 

Tag Cloud

origination feesmake saving a pleasureDeath Benefitkeep a scheduleMoney-Savingtoo expensive schooloverspend on giftsrolloverPBS Specialpaying for collegeis it necessary?taxesburn outbest interest rates20% down payment avoid feespush yourself to save more for retirementhome insurancemortgage disclosureSuze Orman's Money Wars50 over 50mortgagefraudulent returnstudentraise your deductibletax refund fraudadvice for college graduatesWarner Bros Television Groupno splurge Minor Children balance transfer affordabilityautomatic paymentclosing disclosureGay CouplesRichmortgage interest tax deductionCommunication Skills cut monthly cellular billFiscal ResponsibilityHDHP accelerate dental worksavings pleasuredo you need life insurancefinancial fearscreate new truthterm life insuranceresponsible with moneySelectQuote.com20% down paymentpurely financial standpointterm insurancepay down car loannot gender specific Financial EducatorJose Rodriguezultimate compounding giftsame-sex marriagedepreciating asset Sandy Hook Promisegift up to 14,000Wall Streetloved ones dependent on incomespring summer Durable Power of Attorney for Health CareSatisfyingemployer offered life insuranceretirement plansame sex marriage band end Floridafinancial independenceretirment savingsproperty taxhome related tax break bonus summer job match income only refinance if it paysHDHP/HSALong Term Care premiumsteens and moneylow-cost index mutual fundone credit cardHolidaystore credit cardsGiftsCivil Rightsget the most out of social security Employer Matched Contributionlearn good financial choicesno private loansoverspend on dining outprotect loved ones high credit score discountreduce monthly paymentnegotiate points with bank or sellerretirementreplace permanent life insurance with termcommissionsexercise reguarlymax employer matched 401(k) contributionbetter termsinsuranceonly offered while employed 15-year refinance dealdon't defer interest paymentsinterest on student loansHDHP's are good for youbest loan deal back door Roth IRAhealthy retirement blood pressureFinancial Adviceemotional stakesFICO credit score credit card mortgageMust Have Documentseliminate credit card debtclosing feeslong term goallong term careworst financial mistakecnbc alarm clockPost-Divorcesave moneyemergency fund savingskids schedule paymentsstandard rateyours, mine & oursidentity theftRetirement IncomeCredit scoredoctors in networkfull retirement ageat worst still pay 75% benefitHeartearn more on savingshome buying budgetAmy Lacyetdon't ignore open enrollmentwomen live longerVital Documentsno apologyavoid burn outteach importance of helping otherscar buying mistakes!00% tuition paidloan is giftcollege graduateincrease retirement contribution ratemoney vowsquick closingMost Influential Celebrities Listrepay student loansverify retirement plan with HR or plan sponsormax benefit coveredHigh FICO Score = Better Rateborrowing plan do not pay allowance for good behaviorjanuary billsschool federal student loan deferment SpendingConventional loan PMIForbes20% equityconfidentmonthly benefit waive home inspection bidprescription tiersmall changes compare monthly expensesSwap Older Annuities or Life Insurance FICO Scorepresident Obamano negativityhome loan credit score below 740 dangerous retirement planPrime Rate Rise 20153 step financial road maplow down paymentback-to-school budgetfour steps to retirement savings car loanAmericans don't use all paid vacation timeswitch to spouse coveragecouple financesInfluentialsbad decisions2016 adjust estimated taxtitle insurancepublic service loan forgiveness programretirement accountsPersonal FinanceAshley SpringerMoney Marketpaid in fulllower ratehealthy teethRevocable Trust20 year level term ritual schedulefinancial concernsavingsbe good exampleLTCplanSuze is my biggest mentorbecome member valentines dayCollege of Veterinary Medicineshop online guaranteed level term policycar leasingfile taxes quickly3 bucket approachhome ownershipno life insurance financially irresponsiblereduce withholding3 savings buckets unsubsidized Stafford loangift not loanGraceFinancial Power of Attorneystretch out haircut appointmentssidelinedExhibitionHigh Credit ScoreFederal Funds RateStaffords this year have a fixed 6.8% interest rateno fee transferPrime Rate Increase401(k) Contributionsreferrals permanent life insurancebuy home you can affordloan no longer than 36monthsdebtphysical healthlive below your means19 years cash flow problemconsider roth 401(k)Federal PLUS loanis it true? one annual feewould you decline a bonusadult childrenincrease emergency savingsRoth 401(k)monthly dental insurance premiumEasy Life Insurance no private loanis it necessaryis it kind?non conventional routeknow before you owemarriage financial responsibilityFinancial Awarenessbreakdown projected monthly housing costraise insurance deductibleFinancial Cliffhealthy aging traditional vs roth 401(k)high down paymentdon't do five year car loanspeak new goalbest interest of investorFinancial Gift Cliffroth iraThe Suze Orman Showdon't derail retirement savingspay credit debt ASAPpremiumloan necessityCD'sloan big picture raising mortgage rates contribute household expenses AARP Social security calculatorLovecut monthly cable billEmergency SavingsUniversity of Illinoisfinancing car graduation8 Rulesgrandchild summer job IRA contributionalternative FICO scoreeight month living expense interest capitalizationcontribution let them have 50% controlBill and Pennydental discount plandeath benefit 20 to 25 times annual incomedon't use allowance as bribemobile appCPI-Wcommunity banklower overall drug costAlarm Clockoverspend on nights outpoint cost offset by savingsbuying car 2016Revocable Living TrustHoliday SeasonGiftmaintain standard of livingFinal GoodbyeLTCi ASAPsocial securityStudent Debtignore 6 month grace period kid borrow first8 month safety netnew carmultiple lendersGay Rights15 year mortgagerequired disclosurealways use all paid time offVeterinary Schoolborrow each year, capitalization is going to pile up wives should be involved in retirementhome budget after tax costFHA loan feesAdequate Auto and Home Insurance401Kincentives for health care wellness screeningshorter payback perioddream schoolworkaholicFederal Stafford loanage appropriate choreBankruptcyForbes Top 10higher insurance deductibleHDHP's are not badYoung Adult Long Term Care shoppingapproved medical 100% tax-freefinancial aidswitch to roth 401(k)Financialbuying a carCredit Card Rate Increasepublic service career student loan repayment affordable premium10 year repayment plan get credit cardNewtownInflation Benefitstudent loan repayment plan30 year mortgage don't spend children's bookFICO at least 720children under 18get health insuranceautomate student loan paymentsCombo Insurance ProductsInterestdon't charge a pennyOverspendingreduce interest rateUS Tax CodeWillhome buying seasonpercentage men widowed 75-84high deductible health care planlife insurance name trust as beneficiaryopen enrollment review value moneyCommencementearn allowanceidentity fraudnear historic lowsHDHP'sBeautyPhyllis Shelton expert long-term carefile asapdeath benefit needs for family2016 adjust withholdingmax employee matchStudent Loanunexpected expenseheartachereal estate mistakesSuze approvedMoneyCOLAUniversity of Floridarequire chore in exchange for allowanceincreased auto insurance premiumEric Dodge pay 100% cashsave tax ID theft6 month waiting periodFree Debt Eliminatormoney-aware childdon't blow tax refundraise deductiblesrefundfocus on new truth verify wellness screening and programsSuze Ormanlowest cost fund optionAuto Savings pay interest while in schoolhealthy gumsretain separate credit cardsprotect dependent ARM Cautionlow credit scorespecial saving accountChanging Livesanticipated salaryfocus on needsHSA tax savingsrent vs buycost of capitalization calculatorno sneaking in feeslower interest rateMass Mutualdebit cardteensFRAsocial security never insolventallowance taskbill paying prioritiesescrowget over life insurance phobiahigher monthly paymentTeachFixed Rate MortgageHoliday ShoppingETF's20 to 25 times annual incomestandard deduction comparison shoppingSchool of Social Workdebt freehealthy youcommitcostly legal powerfulcommunity collegeuniversal college accessrising home pricesemployer funding HSAnot enough life insuranceFinancial Solutions For YouMarlo Thomaspositivepeace of mind740 credit scoremanage student loansSuze Orman spouse Kathy TravisBankLifestylebad retirement planningpay high rate off firstadd teenpreexisting condition not coveredcredit reportclosing costs 2% of loanlong-term care credit uniongay marriage ban end Florida AccuQuote.comCredit Card Interest Rateengaged in financesFundsco-sign Federal Reserveshort term goal high premiumsForeclosureprotect and provide for minor child compare provider pricingNew York Lifedoctor no longer in networkno retirement funds for down paymentallowancestay positivedon't buy wantslower mortgage interestHow To Build Credit8 month emergency fundthree year car loanpay more than minimumbig results increase retirement savingsdon't cover cosmetic dentistryfamily save at least $100 monthlyinitial tax break gift grandchild IRA contributionSave Us MoneyCiti Simplicity Card overcome financial fearsraising interest ratesprovider of financial supportinsurance yearly reviewprotect your familysetup automatic savings withdrawpercentage of women widowed 75-84iffy incomeemergency fund schedule vacationsuccesssuitablezero rate transfer dealsstudent loan repaymentInfluential CelebrityFinancial Systemlower premiumdon't extend mortgage Stock Investmentsbe kind to yourself40% toward financial goalteach your child good money habitsFinancial Awareness Video Festivalinsurance mistakegrandparent IRA contribution Long Term Care Insurance student loan debtlow mileage discountbetter loan dealspay down student loan debtfinancial goal phraseno late fee no waiting periodunder 18 financial giftbuy down One Wallet At A Timeprofessional advisorSuze changed my life10% donate to charityMother2015 financial roadmapresponsibleannual cost of living adjustmentreal estate marketMortgage Credit Availability Indexhome buying mistakesARMcalculate dependents annual income needsitemized deductionage appropriate goalsautomatic withdraw to savings marriage inequalitydental insurance leave a legacycredit cardlousy investmentenjoy saving fiduciaryhigh FICO scoretelevision hostcostly insurance mistakeGoodbyeconfident of solutionCNBCcollege studentwomen long term careCory BookerUrbana-ChampaignWashingtonRetirement Savingsfinancial argumentscan you afford itLTC shoppingStudent Debt Crisishealthy retirement weightSandy Hook Elementary Schoolwrite new goalNew american Dream secure credithousing market2017 Taxesletter to suzeno intereststaycationdear suzelong-term care premiumsbudgetmeet monthly holiday spendingpaid vacationTelepicturesSelfishSuze Orman Scholarshipdental savings planmortgage brokerwomen longer life spanInvest for savings growth2015 record year car salessecured cardstudent loan repayment estimatorIRA contribution gifted moneytake actionPay Off Debt Before Retirementno tax on withdrawlsAARPlife insurancewomen outlive mendangerous money seasonjuggle multiple financial goalsface your financial fearbuy homerefinancesocial workderailed plan3% debt transferred charges on credit cardpay off debtadjust allocations mental healthcredit managementcredit utilization rate4 Must Have Documents highest possible benefitLegal Guardianbetter loan ratesBaby Boomerssocial security not going brokestrained relationshipbe true to yourself


FICO says about 15 million people who don’t currently qualify for a standard FICO score will be given a score using the alternative data. Right now FICO’s alternative scores are being shared with a dozen credit card issuers in a pilot program. Consumers who are given a credit card based on this alternative score and then make timely payments on that new card over a six-month period will then be given a standard FICO score. 

It’s unfortunate that the “solution” to finally get a traditional FICO score requires getting a credit card in the first place, given that so many people rightfully prefer to avoid credit cards. But I still see this as significant progress. At least we are finally getting recognition that paying your utility bills can be an important gauge of your financial responsibility. 

For anyone who has never had a credit card, but is now sent an offer, here’s what you must do before you accept: 

  • Promise yourself you will only use the card a few times a month.
  • Promise yourself you will only charge what you can pay off in full every month.  No unpaid balances, do you hear me! 

If you can honestly fulfill those two promises, I think it is fine to take advantage of a credit card offer as an entryway to finally getting a standard FICO score. 

And it should go without saying that the existence of this new alternative score makes it ever more important to automate all your bill payments. Now that your history paying the cell bill, your water bill, the gas and electric bill  etc.…is a building block to a traditional FICO score, you can’t afford to be sloppy and miss payments.

View Blog & News List
People First. Then Money. Then Things.
Connect with me on Facebook Connect with me on YouTube Connect with me on Twitter
© 2017 Suze Orman Media Inc. All rights reserved.
 
 |  Search  |  Sitemap  |  Privacy  |  Terms
Sign Up For E-mail Offers
Open Panel
Close Panel