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Credit Reports & Scores

Score One for You

Fair Isaac's new system could make it easier for you to qualify for a loan.

It's a perfect Catch-22: If your credit history is insufficient to get a FICO credit score, it's hard to qualify for a loan or a credit card. That's because many lenders use FICO scores to decide whether to offer you credit and to determine your interest rate. But if a bank won't give you a loan, how can you build a credit history and compile a score?

Fair Isaac, the firm that created the FICO score, has developed the new FICO Expansion score to measure the creditworthiness of people who have little or no information on file with the three major credit bureaus. The new score, like the traditional FICO score, runs from 300 to 850. A score in the 700s indicates that you are a good credit risk.

Instead of using credit-card history and mortgage payments to calculate the score, Fair Isaac picks up other data -- for example, whether you pay your electric bill on time and maintain a clean checking account. So twentysomethings who rent an apartment should have a better chance of getting credit on good terms.

Fair Isaac says car dealers and credit-card issuers are starting to use its Expansion score. But mortgage lenders are waiting to see whether Fannie Mae and Freddie Mac are willing to buy loans made using the new scores. -- Joan Goldwasser