New Ways to Improve Your Credit
Post-bankruptcy, the best way to improve your credit has always been making your car payment on time every month and making your mortgage payment on time. But what if you don’t have a car payment or home mortgage? How can you improve your credit score to obtain credit cards, qualify for a car loan, and when you are ready, get a home mortgage? And what if you are such a weak credit risk that you do not have a FICO score?
Over 53 million Americans unable to obtain credit cards, mortgages and auto loans from banks will receive a boost with the launch of a new credit score aimed at consumers regarded as too risky by lenders as reported by the Wall Street Journal today. The new metric is being developed by Fair Isaac Corp (FICO)., creator of the most widely used credit scores. Traditional FICO scores that lenders use in the approval or rejection process are calculated based on the information in the credit reports from the three major credit-reporting firms, Equifax, Experian, and TransUnion. The new score will instead pull data from a separate database of telecommunications and utility providers maintained by Equifax. It also will incorporate
The new Credit score will be calculated based on consumers’ payment history with their cable, cellphone, electric and gas bills, as well as how often they change addresses and other factors. The new score will help applicants who don’t use credit often but are responsible with their monthly payments to get approved for financing.
The takeaway? Build up your credit by paying your cable bill, cellphone bill, and utility bills on time. This will ultimately get you access to credit and will improve your FICO score!