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

mobile appStudent Loanhigh deductible health care planis it necessarymortgage brokerget over life insurance phobianegotiate points with bank or sellermax employee matchlower premiumhigh FICO scorebuy down no sneaking in feesloved ones dependent on incomeBankinterest on student loanswrite new goalprotect your familygrandchild summer job IRA contributiondon't use allowance as bribecreate new truthdon't spend automate student loan payments19 years cash flow problemmax employer matched 401(k) contributionteach importance of helping othersFunds15-year refinance dealquick closingFinancial Gift Cliffautomatic withdraw to savings Post-Divorcedon't cover cosmetic dentistrytax ID theftadult childrenincrease retirement contribution ratewould you decline a bonusMoney-Savingbetter loan ratescost of capitalization calculatorcontribution money vowsfinancing car advice for college graduatesescrowdangerous retirement planStudent Debt Crisissummer job match income protect and provide for minor child juggle multiple financial goalsavoid burn outbalance transfer term life insuranceearn allowanceCollege of Veterinary MedicineFICO at least 720Heartcnbc alarm clocklower rateHDHP's are not badETF'sEasy Life Insurance letter to suzetitle insuranceInterestStock InvestmentsHDHP's are good for youuniversal college accessresponsibleCiti Simplicity Card sidelinedage appropriate choreEric Dodge Baby Boomers20% down paymentultimate compounding giftloan necessityGracestandard rateNew american Dream 20 year level term University of Floridacollege studentHolidaywomen live longer2016 adjust estimated taxAARPAuto Savings monthly dental insurance premiumunder 18 financial giftmental healthcredit management4 Must Have Documents make saving a pleasureMotherrequired disclosureEmergency Savingsdoctor no longer in networkcalculate dependents annual income needscommitswitch to roth 401(k)teach your child good money habitsbad decisionsForbes Top 10IRA contribution gifted moneyno tax on withdrawlsSuze Orman spouse Kathy Travisterm insuranceno late fee overspend on dining outSuze Orman's Money Warspay interest while in school3 savings buckets Ashley SpringerMoneypay 100% cashAmy Lacyetcommunity collegeSatisfyingpay more than minimumFinancial Awareness Video Festivalplanmarriage financial responsibilityexercise reguarlymortgageannual cost of living adjustmentvalentines dayphysical healthfederal student loan deferment Marlo Thomascommunity bankswitch to spouse coveragefour steps to retirement savings low credit scoredon't extend mortgage Alarm Clockfocus on needsrefundUrbana-Champaignwives should be involved in retirementThe Suze Orman Showpresident Obamadental discount plannew carbecome member overspend on giftsno life insurance financially irresponsibleCredit Card Interest Ratecharges on credit carddeath benefit needs for family2016 adjust withholdingEmployer Matched Contributionno waiting periodrising home pricesnot enough life insurancepay high rate off firstfamily save at least $100 monthlyPay Off Debt Before RetirementMost Influential Celebrities Listsetup automatic savings withdrawinsurance mistakeVeterinary Schoolhigh premiumsincrease retirement savingskid borrow firstemergency fund women longer life spanno splurge HSA tax savingsRetirement Savingsno private loanFinancial Educatorno retirement funds for down paymentmanage student loansnear historic lowsanticipated salaryhome ownershipderailed planzero rate transfer dealsclosing costs 2% of loanfull retirement ageborrow each year, capitalization is going to pile up long-term care premiumsBeautyunsubsidized Stafford loancouple financessocial workgift up to 14,000roth iralong term carepaid vacationdream schoolconfident of solutionMass Mutualcollege graduateresponsible with moneyraise insurance deductiblepreexisting condition not coveredNewtown3 step financial road mapprescription tierinsurancevalue moneyhome buying budgetage appropriate goalsConventional loan PMIMoney Marketpurely financial standpoint2015 record year car salesconfidentWarner Bros Television Groupfinancial goal phraseCPI-WdebtCivil Rightsspecial saving accountreduce monthly paymentdon't blow tax refundcar loanStudent DebtFinancial Awareness!00% tuition paidrent vs buyChanging Livessame-sex marriagesmall changes repay student loansautomatic paymentpay off debtfinancial concernInfluentialsMortgage Credit Availability IndexForeclosureSuze changed my lifesave moneydon't defer interest paymentsfinancial independencedental insurance SelectQuote.comadjust allocations How To Build Creditclosing feeshealthy aging US Tax Code3 bucket approachOne Wallet At A Timebetter termsapproved medical 100% tax-freemortgage disclosuredear suzeteensrequire chore in exchange for allowancecar leasingBankruptcymax benefit coveredis it true? keep a scheduleback door Roth IRAstore credit cardshighest possible benefitleave a legacyenjoy saving Sandy Hook Elementary SchoolRoth 401(k)don't buy wantsbill paying prioritiesbuy home you can affordbreakdown projected monthly housing costcut monthly cellular bill8 Ruleslousy investmentcontribute household expenses ritual scheduleFinancial Solutions For Youretirement accountsshort term goal Gay CouplesPersonal Financeschool Jose Rodriguezwomen outlive menFinancial Systemfile asap401Kloan big picture home insurancebe good examplemortgage interest tax deduction10% donate to charityrefinancePrime Rate IncreaseWashingtonworst financial mistakekids schedule paymentsbig results percentage men widowed 75-84powerfulCNBCCommunication Skills only offered while employed don't charge a pennySuze Orman401(k) Contributionshousing marketadd teenreplace permanent life insurance with termmultiple lendersSpendinghome loan credit score below 740 debit card40% toward financial goalSchool of Social Workstudent loan repayment estimatorlet them have 50% controlborrowing plan grandparent IRA contribution standard deduction Teachhome related tax break bonus traditional vs roth 401(k)Forbesfocus on new truth studentCOLAalternative FICO scoreGiftcredit card50 over 50meet monthly New York LifesuccessFICO credit score credit card mortgagepercentage of women widowed 75-84Save Us Moneydebt free3% debt transferred teens and money8 month safety nethome budget after tax costcostly insurance mistakebe kind to yourselfloan is gifthome buying mistakesRetirement Incomeback-to-school budgetemergency fund savingsconsider roth 401(k)PBS Specialfraudulent returnlower mortgage interestco-sign RichFinancial AdviceTelepicturesdeath benefit 20 to 25 times annual incomecut monthly cable billExhibitionFederal Funds RateWall StreetCredit Card Rate Increasepay credit debt ASAPverify wellness screening and programsstudent loan repaymentdental savings planUniversity of IllinoisAmericans don't use all paid vacation timeproperty taxPrime Rate Rise 2015premiumget the most out of social security Fiscal ResponsibilityLong Term Care Insurance no negativitytake actionreal estate mistakeslife insuranceFICO Scorelowest cost fund optionhigher insurance deductibleLTCi ASAPalways use all paid time offidentity frauddo not pay allowance for good behaviorHDHP/HSAGay Rightsgay marriage ban end Florida three year car loanloan no longer than 36monthsHDHP's2017 Taxesface your financial fearFHA loan feesAdequate Auto and Home Insuranceemployer funding HSAlong-term care raise deductibles8 month emergency fundyours, mine & ourslearn good financial choicesis it necessary?AARP Social security calculatorFree Debt EliminatorInfluential CelebrityHoliday Shoppingbest interest rateslife insurance name trust as beneficiarysocial security not going brokeinsurance yearly reviewwaive home inspection bidchildren's bookFinancialgraduationSandy Hook Promiselong term goalfinancial argumentsverify retirement plan with HR or plan sponsorstretch out haircut appointmentsspeak new goalretirementfile taxes quicklysavings pleasurecar buying mistakes20% down payment avoid feesinitial tax break ignore 6 month grace period employer offered life insuranceFinancial Power of Attorney2015 financial roadmapsame sex marriage band end Floridais it kind?public service loan forgiveness programorigination feesHDHP itemized deductionreduce withholdingbetter loan dealspush yourself to save more for retirementLifestylesavingsinterest capitalizationdepreciating asset best loan deal compare monthly expensesno interestLong Term Care shoppingno fee transfershop online guaranteed level term policyStaffords this year have a fixed 6.8% interest ratelive below your meansdon't derail retirement savingsFRAAccuQuote.compublic service career student loan repayment Holiday SeasonSuze is my biggest mentorhealthy retirement weightwomen long term caresecured cardholiday spendingone credit cardpay down car loanmaintain standard of livingreferrals comparison shoppingiffy incomeretirment savingsemotional stakesFinal GoodbyePhyllis Shelton expert long-term carechildren under 18Suze Orman ScholarshipSuze approvedBill and Pennymoney-aware childoverspend on nights outlower overall drug costpoint cost offset by savingscredit reporthealthy retirement blood pressuretaxesbuy homedon't ignore open enrollmentLTC shoppingbuying a cardon't do five year car loanprovider of financial supportsocial securitysecure creditRevocable Living Trustreduce interest rategift grandchild IRA contributionprotect dependent 6 month waiting periodprotect loved ones Credit scoreCommencementpositiveInvest for savings growthidentity theftbad retirement planningstudent loan debtretain separate credit cardsopen enrollment review low down paymentincentives for health care wellness screeningbuying car 2016allowance taskone annual feedangerous money seasonsocial security never insolventsave get health insuranceDurable Power of Attorney for Health CareLTCstay positivebe true to yourselfdo you need life insuranceonly refinance if it paysnot gender specific overcome financial fearsfinancial fearsCory Bookerlow-cost index mutual fundYoung Adult television hostclosing disclosureget credit cardpaying for collegejanuary billsretirement planpay down student loan debtreal estate marketknow before you owemonthly benefit paid in fullLoveunexpected expenserollovermarriage inequality20% equitycan you afford itgift not loanGoodbyeOverspendingbudget10 year repayment plan increase emergency savingsallowancetax refund fraudstudent loan repayment planat worst still pay 75% benefitdoctors in networkGiftspermanent life insuranceLong Term Care premiumsFinancial Cliffheartachecredit union

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