Tempting utility

1 April 2015 By Daniel Indiviglio

A credit score that monitors whether Americans pay household bills on time should expand how many individuals can borrow from banks. But it could also encourage financial institutions desperate for higher returns to ignore more crucial metrics like income and outstanding debt.

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Fair Isaac Corp, which is responsible for U.S. consumer credit scores known as FICO, is set to announce a new, broader metric to assess borrower creditworthiness as soon as this week, the Wall Street Journal reported on April 1.

The new measure will incorporate payment history for services previously unmonitored by FICO, such as cable, cellphone and utility bills, as well as other factors like how often potential borrowers change addresses. FICO has been testing the new scoring system since November with 10 credit card issuers. The company plans to release the new system for nationwide use by the end of the year.

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