Fair Isaac and TransUnion are working on rolling out new credit scores, tackling the 26 million "credit invisible" individuals that do not have enough history to generate a FICO score. Although the goal is to help underserved potential borrowers gain access to capital, there is also a risk that all the additional information will worsen a persons credit profile. It will be interesting to see how these companies will collect and analyze all the various data points, ranging from banking account history to home addresses.
THE credit reporting industry is starting to unveil alternative credit scores that use more than just bank and credit card information and allow lenders to extend credit to more consumers. Fair Isaac, creator of the widely used FICO credit score, has been testing a new score with major credit card lenders for the last year that makes use of alternative data, like cable and cellphone bills, to help assess the likelihood that a borrower will repay a loan. Now TransUnion, one of the three major credit reporting bureaus, is introducing its own alternative system, aimed at assigning scores to people who may have low traditional scores or lack them entirely.