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

Holiday SeasonMoneyemployer offered life insurancelearn good financial choicescharges on credit cardborrowing plan buying car 2016Citi Simplicity Card 401Kbuy homeConventional loan PMIinsurance mistakeultimate compounding giftavoid burn outstudent loan repayment estimatorreferrals 8 Ruleschildren's booklive below your meansescrowHearthigh deductible health care planFree Debt EliminatorSuze is my biggest mentorSatisfyingno late fee big results advice for college graduatescnbc alarm clockincrease emergency savingsInfluentialsbetter loan ratescan you afford itPersonal Financefull retirement agelower premiumnew carfinancial concernStudent DebtUniversity of Floridasmall changes manage student loansFinancial Systemmortgageplanworkaholicsave moneyCOLAback door Roth IRAFinancial Solutions For Youmortgage brokermaintain standard of livingjanuary billsHDHP doctor no longer in networkidentity theftcredit cardGay Couplesteach importance of helping othersPost-Divorcemonthly dental insurance premiumwrite new goalannual cost of living adjustmentschool college studentSuze changed my liferaise insurance deductiblebetter loan dealshigh down paymentadjust allocations long term careCPI-Wclosing costs 2% of loanreplace permanent life insurance with termresponsible with moneyhome related tax break bonus pay down car loanRichSpendinginitial tax break don't defer interest paymentsincrease retirement savingshealthy retirement weightleave a legacydeath benefit 20 to 25 times annual incomelow-cost index mutual fundfraudulent returnFederal Funds Ratefinancing car Young Adult high FICO scoreFinancial Cliffbad decisionsletter to suzezero rate transfer dealsritual schedulebad retirement planningreduce monthly paymentFinancialLong Term Care Insurance lower ratebuy home you can affordreal estate marketpay 100% cashMortgage Credit Availability Indexbreakdown projected monthly housing costprotect and provide for minor child couple financesFICO credit score credit card mortgagegay marriage ban end Florida positiveNew american Dream closing feespercentage men widowed 75-84loan big picture high premiumsHDHP/HSALTC shoppingEasy Life Insurance Money-SavingSelectQuote.comDurable Power of Attorney for Health Careholiday spendingvalentines dayPrime Rate Increaseback-to-school budgetorigination feesemergency fund FICO at least 720overcome financial fearsWall StreetThe Suze Orman ShowCredit Card Rate Increasemax employee matchstretch out haircut appointmentsmortgage disclosureclosing disclosurewomen longer life spandental savings planbetter termspowerfulcommitOverspendingknow before you owesocial workfile taxes quicklyInterestincrease retirement contribution rateone annual feeat worst still pay 75% benefitco-sign exercise reguarlysame-sex marriagederailed planBankruptcyBeautyretirement planGay RightsFinal Goodbyeage appropriate chorehealthy retirement blood pressurewaive home inspection bidface your financial fearuniversal college accessnear historic lowsdon't derail retirement savingsmobile appInvest for savings growthapproved medical 100% tax-freewives should be involved in retirementprescription tierchildren under 18Suze approveddeath benefit needs for familyautomatic paymentfour steps to retirement savings insurancecredit utilization rateswitch to roth 401(k)enjoy saving financial goal phraseloved ones dependent on incomepermanent life insurancepreexisting condition not coveredBankautomatic withdraw to savings contribute household expenses no fee transferthree year car loanSandy Hook Promisecredit managementdon't buy wantsPrime Rate Rise 2015create new truthhighest possible benefitHDHP's are good for youFinancial Adviceretirment savings15-year refinance dealfocus on new truth term insurance20% down paymenthome budget after tax costhome ownershipEmployer Matched Contributionoverspend on dining outmental healthretirementaffordable premiumUS Tax Codealternative FICO scorepush yourself to save more for retirementmarriage inequalitynegotiate points with bank or selleronly refinance if it paysCommunication Skills juggle multiple financial goalsget health insurancesocial security not going brokerent vs buyGiftspay credit debt ASAPkid borrow firstprotect your familyreal estate mistakesemployer funding HSApurely financial standpointdebtmoney-aware childgift not loanphysical healthkeep a scheduleis it kind?consider roth 401(k)tax refund fraudrefinanceAuto Savings adult childrenCredit Card Interest Ratecompare provider pricingSuze Orman Scholarshipgrandchild summer job IRA contribution2017 Taxesdo not pay allowance for good behavior20% equitydream schoolloan no longer than 36monthstax ID theftdon't extend mortgage debit cardForbes Top 10home buying season8 month emergency fundpercentage of women widowed 75-84traditional vs roth 401(k)no sneaking in feesearn allowancerefundrequired disclosurebudgethousing marketHDHP's are not badpresident Obamaadd teenHow To Build Credit401(k) ContributionsheartacheFiscal Responsibilitydangerous retirement planconfident of solutionspring summer FRAlife insurance name trust as beneficiaryspeak new goal2016 adjust withholdingburn outfinancial fearsitemized deductionpaid in fullget the most out of social security depreciating asset University of Illinois6 month waiting periodLifestylesave LTCi ASAPvalue moneyfinancial arguments10 year repayment plan teens and moneyno tax on withdrawlscollege graduatesecured cardSuze Orman's Money WarsRetirement Income3 savings buckets 8 month safety netteenswould you decline a bonusprotect dependent 20 year level term College of Veterinary Medicinebecome member dental insurance Influential Celebrityhealthy youdon't spend reduce interest rateno private loancompare monthly expensesmarriage financial responsibilityinterest on student loansGiftstrained relationshipno retirement funds for down paymentbuying a carlow down paymentopen enrollment review take actionmax employer matched 401(k) contributionCredit scoreAARPmoney vowsraise your deductiblelet them have 50% controlForbesHDHP'sCNBCfederal student loan deferment LTChome loan credit score below 740 get over life insurance phobiastudent loan debtpay down student loan debtgrandparent IRA contribution TelepicturesHolidayMoney MarketFinancial Gift Cliffbest interest ratesgift grandchild IRA contributionyours, mine & oursone credit cardmake saving a pleasureunder 18 financial giftpublic service career student loan repayment car leasingverify retirement plan with HR or plan sponsorbalance transfer Long Term Care premiumsiffy incomeSave Us Moneyis it necessaryinsurance yearly reviewbe true to yourselfbest loan deal low mileage discountquick closinglong-term care premiumsStudent Debt CrisisStock Investmentsdoctors in networksavingshigh credit score discountshort term goal life insurancecostly insurance mistakecar buying mistakesAdequate Auto and Home Insurancelowest cost fund optionswitch to spouse coveragepay interest while in school!00% tuition paidproperty taxis it necessary?MotherpremiumETF's3 step financial road map20% down payment avoid feesdear suzeincentives for health care wellness screeningTeachAlarm Clockdental discount plan4 Must Have Documents loan necessityLovestandard ratedebt freeloan is gift3% debt transferred Student Loanlower mortgage interestfamily save at least $100 monthlylousy investmentno negativitykids schedule paymentsRetirement Savingsdon't use allowance as bribeAshley SpringerBaby Boomersget credit cardfinancial independenceworst financial mistake2015 financial roadmaphigher insurance deductiblecalculate dependents annual income needsNewtownsetup automatic savings withdrawspecial saving accountshop online guaranteed level term policyhome insuranceForeclosurerequire chore in exchange for allowanceprotect loved ones term life insuranceExhibitionallowancesocial securitycost of capitalization calculatorignore 6 month grace period Commencementno splurge car loanFinancial Power of AttorneyFundsWashington50 over 50Goodbyenot enough life insurancehome buying mistakesage appropriate goals20 to 25 times annual incomepoint cost offset by savingsFHA loan feesFinancial Awarenesscomparison shoppingHoliday Shoppingonly offered while employed cut monthly cable billEric Dodge Staffords this year have a fixed 6.8% interest rateVeterinary School740 credit scoresocial security never insolventretain separate credit cardsoverspend on giftsgraduationallowance taskborrow each year, capitalization is going to pile up student loan repayment planrepay student loansprovider of financial supportSuze Orman spouse Kathy Travisinterest capitalizationsame sex marriage band end FloridaFinancial Awareness Video Festivalunexpected expenseverify wellness screening and programsresponsiblebill paying prioritiesCivil Rightsmultiple lendersGraceIRA contribution gifted moneylow credit scoreAccuQuote.com40% toward financial goalrising home pricespeace of mindtaxessummer job match income long term goalpay high rate off firstemotional stakesOne Wallet At A Timealways use all paid time offSandy Hook Elementary Schooldon't cover cosmetic dentistryoverspend on nights outsavings pleasurePBS Specialstaycationfile asapBill and Pennybe kind to yourselfstandard deduction increased auto insurance premiumJose Rodriguezstay positivemeet monthly title insurancelong-term care 3 bucket approachRevocable Living Trustmax benefit coveredcredit report10% donate to charityUrbana-Champaignhome buying budgetHSA tax savingsFinancial Educatorreduce withholdingAmy Lacyetcontribution women outlive menbuy down gift up to 14,000Changing Livestelevision hostdo you need life insuranceanticipated salarylower overall drug costdon't ignore open enrollment2016 adjust estimated taxAmericans don't use all paid vacation timeMass Mutualno apologyroth iraMost Influential Celebrities Listdangerous money seasonemergency fund savingsAARP Social security calculatorhealthy aging no interestpublic service loan forgiveness programrolloverconfidentRoth 401(k)teach your child good money habitssidelinedfocus on needsNew York LifeEmergency SavingsCory BookerFICO Scorestore credit cardsno life insurance financially irresponsiblebe good examplepaying for collegeSchool of Social Workschedule vacationmortgage interest tax deductionsecure creditcommunity collegeautomate student loan paymentscredit unionSuze Ormandon't charge a penny19 years cash flow problemWarner Bros Television Groupsuccessidentity fraudno waiting periodwomen long term carecommunity banknot gender specific Pay Off Debt Before Retirementpaid vacationpay more than minimumLong Term Care shopping2015 record year car salesmonthly benefit studentraise deductiblesretirement accountscut monthly cellular billpay off debtstudent loan repaymentwomen live longerdon't do five year car loanis it true? Marlo Thomasdon't blow tax refundPhyllis Shelton expert long-term careunsubsidized Stafford loan

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