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No. of Recommendations: 8
http://www.wsj.com/article_email/new-metric-aids-weak-credit...

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.

AJ
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No. of Recommendations: 0
Some people, especially some students, who happen to live at home or in University Dorms, often do not have utility bills in their own names.

David
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No. of Recommendations: 5
Some people, especially some students, who happen to live at home or in University Dorms, often do not have utility bills in their own names.

Well, a lot of those students have cellphones, which is another item that can be reported on.

For those who have no utilities, cellphones or other regular monthly bills in their own name, I guess they will be missed by this credit reporting system, too. But by expanding the types of accounts that are reported on, credit reporting will be available on significantly more people. Whether that additional availability will be good or bad for those people remains to be seen.

AJ
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No. of Recommendations: 3
Well, a lot of those students have cellphones, which is another item that can be reported on.

A lot of students have cellphones on their parents plan. My kids do.

PSU
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No. of Recommendations: 4
A lot of students have cellphones on their parents plan. My kids do.

Then I guess they would be missed by the new credit scoring system, if they don't have any other monthly obligations that will be reported on.

That doesn't change the fact that for people who have been frustrated by the fact that they have to have credit accounts like credit cards, car loans, etc. in order to have a credit score/be in the credit reporting system, there will now be another way for them to get a credit score by using other monthly obligations. For the subset of those who want to be in the credit scoring system, but don't have any monthly obligations in their name that will be scored by either credit scoring system, I guess they will still be in the same situation that they currently are. They will still have to find another way to get into the credit scoring system, like becoming an authorized user on their parent's account, or having a parent co-sign an account with them.

It also doesn't change the fact that there potentially will now be people in the credit scoring system who chose not to use credit specifically so they wouldn't be in the credit scoring system. I guess they will have to figure out a way to get the monthly obligations that will be reported on out of their name if they want to remain out of the credit scoring system.

AJ
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No. of Recommendations: 0
That doesn't change the fact

blah ... blah ... blah

I agreed with your earlier point and didn't comment on it. My comment was limited to cell phones.

PSU
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