Business

New Scoring System Aims to Help People with Poor Credit

Published

11 years ago

April 3, 2015

This April 22, 2005 file photo shows logos for MasterCard and Visa credit cards at the entrance of a New York coffee shop. Fair Isaac, the company behind the widely-used FICO credit score, on Thursday, April 2, 2015 announced a pilot program to help millions of Americans get easier access to credit, based on their record of paying utility bills, instead of their history of loan repayments. (AP Photo/Mark Lennihan, File)

KEN SWEET, AP Business Writer

NEW YORK (AP) — People struggling with a bad credit score, or lack of one, could benefit from a program rolling out in the next few months aimed at making it easier to get a Visa or MasterCard.

The company behind the widely-used FICO credit score announced Thursday a pilot program to help millions of Americans get easier access to credit, based on their record of paying utility bills, instead of their history of loan repayments.

The potential reach of the program is huge. An estimated 53 million Americans, or a quarter of the U.S. adult population, don’t have FICO scores created by the company Fair Isaac. Roughly 90 percent of all lending decisions — credit card applications and auto loans, among others — are based on that score. Banks would normally deny credit to anyone without one, or they could charge them significantly higher interest rates, because the applicants would be considered risky. Scores range from 300 — poor — to 850 — perfect — and are determined by a borrower’s credit payment history, outstanding balances and length of credit history.

These consumers are often the young, without an established credit history, or immigrants, who are new to the U.S. A disproportionate number of these “unscoreable” people are minorities as well, particularly black and Hispanic consumers, says Ankush Tewari, senior director of market planning at LexisNexis Risk Solutions. LexisNexis is one three companies involved in the program.

The program took two years to develop and came from Fair Isaac. Research showed people who have a history of paying utility bills on time would also pay credit card bills on time.

Under the program, Fair Isaac, working with LexisNexis and credit agency Equifax, will create a payment history profile from a person’s utility bills and public property records. FICO would use that pooled data determine an “alternative” credit score when a person with a poor credit history, or none at all, applies for a credit card.

The scores are being made available to the 12 largest credit card issuers, but Fair Isaac did not say which banks will be participating in the program. A spokesman from JPMorgan Chase, the nation’s largest credit card issuer by number of cards, declined to comment. Representatives from American Express and Citigroup did not respond to requests for comment.

The program, which does not have a name yet, is not designed to replace the traditional FICO score and will only be available to credit card issuers initially. Once a person obtains a card using this alternative score, they would be able to establish a credit payment history. They could then apply for auto or home loans.

“Most people have a cellphone, gas or electric bill, and the size of those payments each month can be sizeable,” says Jason Flemish, vice president of consumer risk and credit products at Equifax. “So let’s give them the opportunity to benefit from paying those bills on time.”

Banks have a financial interest in the program. The millions of Americans without a FICO score are potential borrowers who could get credit cards. Because these borrowers would have limited credit history, banks could charge high interest rates.

The data being gathered by Equifax and LexisNexis is also covered under the Fair Credit Reporting Act, says Tewari of LexisNexis. People will be able to dispute any negative event, like a contested utility bill payment, in their credit report.

“All you have to do is just pay your bills on time. It will give you access to credit system,” Flemish says.

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Financial Wellness and Mental Health: Managing Money Stress in College 

While everyone’s financial situation is unique, several common sources of stress have the potential to strain your financial health. These include financial and economic uncertainty, existing debts, unexpected expenses, and mental or physical health changes. Financial stress may differ from situation to situation, but understanding the factors contributing to yours may help you begin to craft a plan for your unique circumstances.

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March 17, 2026

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Sponsored by JPMorganChase

As a college student, managing financial responsibilities can be stressful.

If you’ve found yourself staying up late thinking about your finances or just feeling anxious overall about your financial future, you’re not alone. In one survey, 78% of college students who reported financial stress had negative impacts on their mental health, and 59% considered dropping out. While finances can impact overall stress, taking steps to manage your finances can support your mental, emotional and physical well-being.

When it comes to money, the sources of stress may look different for each student, but identifying the underlying causes and setting goals accordingly may help you feel more confident about your financial future.

Consider these strategies to help improve your financial wellness and reduce stress.

Understand what causes financial stress

2. Determine your financial priorities

Start by reflecting on your financial priorities. For students this often includes paying for school or paying off student loans, studying abroad, saving for spring break, building an emergency fund, paying down credit card debt or buying a car. Name the milestones that are most important to you, and plan accordingly.

3. Create a plan and stick to it

While setting actionable goals starts you on the journey to better financial health, it’s essential to craft a plan to follow through. Identifying and committing to a savings plan may give you a greater sense of control over your finances, which may help reduce your stress. Creating and sticking to a budget allows you to better track where your money is going so you may spend less and save more.

4. Pay down debt

Many students have some form of debt and want to make progress toward reducing their debt obligations. One option is the debt avalanche method, which focuses on paying off your debt with the highest interest rate first, then moving on to the debt with the next-highest interest rate. Another is the debt snowball method, which builds momentum by paying off your smallest debt balance, and then working your way up to the largest amounts.

5. Build your financial resilience

Some financial stress may be inevitable, but building financial resilience may allow you to overcome obstacles more easily. The more you learn about managing your money, for instance, the more prepared you’ll feel if the unexpected happens. Growing your emergency savings also may increase resilience since you’ll be more financially prepared to cover unexpected expenses or pay your living expenses.

6. Seek help and support

Many colleges have resources to help students experiencing financial stress, like financial literacy courses or funds that provide some assistance for students in need. Talk to your admissions counselor or advisor about your concerns, and they can direct you to sources of support. Your school’s counseling center can also be a great resource for mental health assistance if you’re struggling with financial stress.

The bottom line

Financial stress can affect college students’ health and wellbeing, but it doesn’t have to derail your dreams. Setting smart financial goals and developing simple plans to achieve them may help ease your stress. Revisit and adjust your plan as needed to ensure it continues to work for you, and seek additional support on campus as needed to help keep you on track.

 JPMorgan Chase Bank, N.A. Member FDIC