Until now, it was difficult if not impossible for people with no FICO score to qualify for credit. Because it is based on non-conventional information (e.g. installment purchase plans, utility and rental payments) it can effectively predict credit risk for the growing number of US consumers that are typically excluded from the traditional credit-granting process due to insufficient credit histories
An estimated 25% of the US adult population (about 50 million individuals) lack enough traditional credit data to generate a FICO score. These include:
- Young Adults
- People that are new to credit
- The recently divorced
- Immigrants and new Residents
The FICO Expansion Score rage is exactly similar to the traditional FICO range, 300 – 850 so it is easy to compare between the two.
Because it cannot be based on your credit history such as credit cards and loan payments, the score is based on non-traditional data such as:
- Your checking account
- Utility and Rent Payments
- Pay day loans checking
- Installment purchase plans
- Buy-now, Pay-later agreements with organizations such as book-of-the-month clubs
By using these non-conventional data sources, a FICO Expansion Score can be generated for up to 95% of thin-file and 75% of no-hit applicants. It accurately predicts the likelihood that a consumer will become seriously delinquent in the 24 months following scoring.
Currently the score is available to creditors and lenders, but not directly to consumers (i.e. you won’t be able to purchase the score as you would with a traditional FICO).