Firm offers way to develop good credit by monitoring bill payments

Late-night commercials for used cars promise "no credit, no problem." But for the 50 million Americans who have little or no credit — among them young people, recently widowed or divorced individuals, immigrants and those who proudly operate on a cash-only basis — it's "no credit, no luck" if they want to get a credit card, take out a car loan or buy a house.

To remedy the situation, Fair Isaac, the company that compiles the FICO credit score, has developed an Expansion score, based on nontraditional consumer-credit data, including deposit-account records and layaway purchases. Compiling nontraditional credit information isn't always easy, says Craig Watts of Fair Isaac. Most states, for example, prohibit utilities from disclosing the payment histories of their customers. Reporting other types of payments is voluntary, so data can be uneven.

But young people and others without credit may be getting a break. Fair Isaac recently announced that it would include information from Payment Reporting Builds Credit (www.prbc.com), a Web site that gathers data on rent and other recurring bill payments. How does it work? You enter payment info into a Web file and PRBC verifies it for a fee — $20 to confirm six to 36 months of rental payments, and $15 each to verify your payments on phone, utility and cable.

Until the new scores catch on, the best way to get credit if you don't have a history is to apply for a secured card at a site such as Credit.com or CardTrak.com. With a secured card, you make a savings deposit equal to your credit limit. Secured cards generally charge high interest rates plus an annual fee. But after paying your bills on time for about a year, you may qualify for unsecured status and get better terms or apply for a different card. Steer clear of secured cards that charge setup fees.

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