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Subject:  A new credit scoring system Date:  4/1/2015  8:40 PM
Author:  aj485 Number:  309116 of 312906

It's so new, it doesn't even have a name yet, but it will be based on consumer payment histories with cable, cell phone, electric and gas bills, as well as data on how often people move. (Hint - moving more shows less stability, which will probably be bad for your score - I probably won't score so well on this factor, since I've had 8 different addresses in the past 15 years - so I'm not sure that this is such a good assumption.)

The new score, which isn’t yet named, will be calculated based on consumers’ payment history with their cable, cellphone, electric and gas bills, as well as how often they change addresses and other factors, according to Fair Isaac, also known as FICO. Traditional FICO scores that lenders use in the approval or rejection process are calculated based on the information in the credit reports from the three major credit-reporting firms, Equifax Inc., Experian PLC and TransUnion.

The new score will instead pull data from a separate database of telecommunications and utilities providers maintained by Equifax. It also will incorporate data from a LexisNexis database, including how often people change addresses, with frequent changes suggesting less stability.

In theory, it's supposed to provide a credit scoring alternative for those who choose not to use credit, and instead opt for debit cards and autopayments.

The new score could help applicants who don’t use credit often but are responsible with their monthly payments to get approved for financing. Proponents of scores based on alternative data have said that people who are on time with their other bills should be rewarded similarly to people who are on time with their debt payments when it comes to getting approved for new loans.

It will be interesting to see how this is implemented, and how it will change consumer behavior.

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