Credit More Available to Students, Immigrants, Young Adults, Newly Divorced

Have you been turned down for credit, or accepted but at an exorbitant interest rate because you have no FICO credit score?

You may be one of the many people who have difficulty qualifying for a loan or credit card because you have insufficient credit history to obtain a FICO score. Well, help may have arrived, with a new type of score developed by Fair Isaac.

Regular credit scores are based on information gathered by the major national credit bureaus about an individual's payment record on car loans, mortgages, personal loans, utilities, and a variety of other credit. With this information, the credit bureaus attempt to predict the risk that lenders assume when they issue credit to you.

That risk is reflected in your FICO credit score. The higher your FICO score, the lower the risk the lenders feel they are assuming by lending you money, and the more likely they are to lend it to you.

For those who don't have a history of these kinds of payments, such as

• immigrants
• students
• young adults
• the recently divorced

you've probably found that it can be difficult if not impossible to qualify for credit. Now, however, Fair Isaac, the creator and generator of FICO scores, offers a service to lenders (not directly to borrowers) called the FICO Expansion Score. It's a three-digit score with the same range as the traditional FICO score, from 300 to 850.

If you're new to using traditional credit, such as credit cards, car loans, or home loans, the FICO Expansion Score helps you gain access to credit faster by using non-traditional data, such as

• your checking account
• pay day loan cashing
• purchase payment plan performance - (buy to own.

Based on these sources, Fair Isaac can produce a FICO Expansion Score for lenders to use to predict the likelihood that you will pay back the loan. Those lenders can then make a decision about your credit risk.

There's also a downside to this new availability of credit: for traditional FICO Scores, a history of bouncing checks or a problem paying off a television or furniture at a rent-to-own store would not affect your traditional FICO score, but it WILL affect your FICO Expansion Score.

As of early 2007, car dealers and credit card companies are already participating in the FICO Expansion Score service, but most mortgage lenders are waiting to see if Fannie Mae and Freddie Mac will be willing to buy loans made using the FICO Expansion Score. Keep your eyes on the financial news for new developments, and in the meantime, pay allof your financial obligations carefully.