The Fair Isaac Company and their FICO score has become the standard in the loan industry when determining whether or not to make a particular loan to an individual. I have written before about why I am not a big fan of the FICO score, but the primary reason is because the score is all based on debt. Your score is determined by how much debt you have, how much debt you owe, how long you have had the debt, the type of debt, and whether or not you are making your debt payments on time. But what if there was a product that focused on all your monthly payments, not just your debt?
Well after looking for it, it looks like that product exists. eCredable has developed a product called the AMP Credit Rating that you can give to the bank in place of the FICO score. This score includes all your payments that are not related to debt. This can include cell phones, utility payments, monthly rent, and insurance payments among others. You can then take your score to the bank if you thinking of getting a mortgage or are looking to refinance. This is perfect for those of us who pay their bills on time each month but do not have a high FICO score because we refuse to go into debt to build up our score. It is also good for young adults who do not have a credit history or for immigrants who want to establish themselves.
It is exciting to see a product come to the market that includes your entire payment history and I think this will catch on. It is a great alternative to the FICO score because you do not have to borrow money to build your score. For more information check out an interview from their CEO Steve Ely who was on the MoneyplanSOS podcast.