Expansion Score
The credit world is ever-changing. Almost yearly, financial news will highlight a new amendment to an act, a new credit program or a new credit score. Many consumers are unaware that there is more than one credit rating system, including the PLUS Score and VantageScore. Each score is created for a different reason and uses diverse factors to determine if a consumer is a good credit risk; for example, FICO’s Expansion Score, an alternative score used to determine the credit worthiness of those without a traditional credit history.
FICO
According to FICO, approximately 25% of the U.S. adult population (about 50 million consumers) lack enough traditional credit data to generate a FICO score. FICO now uses the Expansion Score to point out credit worthy consumers in previously unscored populations. FICO creates this score by analyzing how consumers pay their utilities, rent and other recurring bills.
Though many credit card lenders and car dealers utilize the score, many mortgage companies are waiting for government supported companies like Fannie Mae and Freddie Mac to buy homes using alternative scoring methods. Though, a study conducted in 2004 proved successful with reliably predicting risk and staying true to the traditional 300 to 850 range, Fannie Mae and Freddie Mac tend to stay publicly silent in regards to alternative methods.
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