The FICO Expansion score is a credit risk score developed by the Fair Isaac Company specifically to help lenders determine the credit worthiness of consumers with insufficient credit histories. The score predicts how likely a consumer will become delinquent in the 24 months following the analysis by evaluating financial relationships, usually absent in credit bureau reports.

FICO Expansion scores use uncommon sources of financial data – including pay day loans and purchase payment plan (lease to own) performance – in order to provide a complete view of the consumer’s credit risk. Fair Isaac has selected the best commercially available data sources to power the score.

Approximately one-fourth of all adult U.S. consumers, roughly 50 million individuals, either lack credit reports entirely or have credit reports with too little information to make a good prediction of credit risk. This group includes immigrants, young adults and people who are recently divorced or widowed.

Similarities and differences between a traditional credit score and the expansion score include:

• Like traditional FICO scores, the Expansion score ranges from 300 to 850.
• The Expansion score is a credit risk score based upon non-traditional consumer credit data (in other words, not based on data from the major national credit bureaus: TransUnion, Equifax and Experian).
• The same logic behind traditional FICO scores applies, meaning that the higher the score a consumer earns the lower a risk they are to lenders.
• As with traditional credit scores, consumers turned down for credit based on the Expansion scores will be able to get a copy of their credit report, which they can challenge or take steps to improve. Up to five reason statements, provided with every score, indicate why the consumer failed to score higher, helping lenders better communicate with their customers.

Whether you have credit or not, paying bills on time, keeping your checking account in good standing and being responsible with your finances provides its own benefits to consumers.

The subject matter contained in our educational publications is for informational purposes only. We suggest that you consult your financial or other advisors when planning for your specific needs or requirements.

Debt Management Credit Counseling Corp. (“DMCC”) is a 501c(3) not-for-profit charitable organization located in Deerfield Beach, Florida. DMCC provides free assistance to any consumer needing a solution to their debt problems, including personal budgeting and debt repayment plans. DMCC financial counselors can be reached by calling 866-618-DEBT (3328). For more information about DMCC, please visit www.dmcccorp.org.

DMCC has designed a free educational course that will give you the knowledge you need to successfully navigate through your day-to-day financial affairs. To read more about this course or to register for the online version, please visit dmcccorp.org/FinancialLiteracy/Introduction.asp; to request a hard copy of this program, call and speak to one of our financial counselors.

You may also subscribe to our bi-weekly e-zine, Thrifty Spending. Each issue contains a Money Saving Tip, a Feature Article and an In-the-Spotlight organization. These are sent straight to your email inbox. To subscribe for this free publication visit www.thriftyspending.org.