In the online world
In the online world, FICO is king. When you go apply for a credit card or car loan all those computer systems on the back-end are totally dependent on getting access to your credit score in a real-time fashion in order to make a real-time decision on your approval for credit or even on the interest rate you will be charged. It is extremely efficient for the creditor. Can you imagine a credit card company trying to evaluate each applicant’s credit report without having a score associated to it? This is why FICO has become so powerful, it’s a quick and easy way for businesses to get access to information about you!
What makes up a FICO score
- Payment history on debt products
- Amounts owed (debts)
- History of credit accounts (debt products)
- New credit (age of debts and available credit lines)
- Types of credit (debts)
What FICO doesn’t know
What FICO does not measure is your timely payments on things like rent payments, your electric bill, or even how well you make the cell phone payment every month. In other words, it does not take into account your good payment history unless it has to do with debt. Seems a little lop-sided, doesn’t’ it?
Use a 3rd party to prove you pay bills on-time
Seems a bit one-sided and unfair, right? But there are new services coming out that will help you prove your credit worthiness. The best one I can think of is eCredable. This is a monthly subscription service that is easy to set up, like setting up accounts in your bill-pay system. When you need to show you are better than your credit score shows, you can request eCredable to verify any or all of the accounts you have listed in your account and have a password-protected link to your report to present to your creditor. They can see your AMP Credit Rating that shows your excellent payment history EVEN IF YOU’VE NEVER HAD DEBT.
It’s a personal relationship with the lender
The creditor’s job is to loan you money or approve you for certain allowances (rental or job approval). If a FICO score doesn’t shine a favorable light on you then using a 3rd party verification service can help shed light on your real financial history. Using a credit report (not a credit score) opens the lines of communication between you and the lender. This way the creditor, landlord, or new boss can take into account all the information that is not represented in a FICO score.
The Equal Credit Opportunity Act requires any creditor who uses the FICO score to consider any 3rd party verification in how they rate you.
Who benefits from using eCredable
People who are just starting out their adult lives do not have a credit score. The same goes for people coming to the U.S. Of course, people who are debt free or only have a mortgage payment (debt free except the house) would have poor FICO scores, so eCredable can help prove credit-worthiness.
By using eCredable to get better insurance or interest rate on a mortgage you can save thousands of dollars in interest. It can make a house payment more affordable and insurance rates more competitive.
Don’t rely on a FICO score to give you a fair grade when it only measures your payments on debt products. Use eCredable and prove you make ALL your payments on-time.