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.
Sign up for Kiplinger’s Free E-Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
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
-
Could This Little Known Data Shift Hurt Your 2026 Social Security COLA?The BLS has changed how it measures the inflationary data that determines whether Social Security benefits will get a Cost-of-Living Adjustment (COLA). Will it hurt your benefits?
-
Financial Pros Provide a Beginner's Guide to Building Wealth in 10 YearsBuilding wealth over 10 years requires understanding your current financial situation, budgeting effectively, eliminating high-interest debt and increasing both your income and financial literacy.
-
Amazon Resale: Where Amazon Prime Returns Become Your Online BargainsFeature Amazon Resale products may have some imperfections, but that often leads to wildly discounted prices.
-
Roth IRA Contribution Limits for 2025Roth IRAs Roth IRA contribution limits have gone up. Here's what you need to know.
-
Four Tips for Renting Out Your Home on Airbnbreal estate Here's what you should know before listing your home on Airbnb.
-
Five Ways to a Cheap Last-Minute VacationTravel It is possible to pull off a cheap last-minute vacation. Here are some tips to make it happen.
-
How Much Life Insurance Do You Need?insurance When assessing how much life insurance you need, take a systematic approach instead of relying on rules of thumb.
-
When Is Amazon Prime Day? Everything We Know, Plus the Best Deals on Apple, Samsung and MoreAmazon Prime Amazon Prime Day is four days this year. Here are the key details you need to know, plus some of our favorite deals to shop during the sale.
-
How to Shop for Life Insurance in 3 Easy Stepsinsurance Shopping for life insurance? You may be able to estimate how much you need online, but that's just the start of your search.
-
Five Ways to Shop for a Low Mortgage RateBecoming a Homeowner Mortgage rates are high this year, but you can still find an affordable loan with these tips.
