New "FICO Resilience" score could help consumers in hard times

Many consumers are getting turned down for personal loans, auto loans, and credit cards now that they've hit hard times and banks are tightening credit.  FICO has just created a new credit score to indicate whether consumers might still be a good risk even in an economic downturn.

Fair Isaac Corp, the folks behind the FICO score, have created the FICO Resilience Index to indicate whether consumers are more or less likely to keep up with payments in a recession.


"It does help them get a few more data points, in helping them understand who's okay to lend to, and who might be a little more susceptible to a downturn like we're seeing now," explained Matt Schulz, Chief Industry Analyst for LendingTree.

The Resilience Index scale is from 1 to 99. Lower scores are better. 1-44 indicates you're "More Resilient" and likely to pay as agreed, while a score over 70 means you're "Very Sensitive" to a downturn.

The score is based on the same factors as your FICO score, such as payment history and the length of your credit history.  But this score emphasizes your utilization rate, your debt versus available credit.  Rates below 30% are considered favorable.


"It stands to reason because the closer you are to being maxed out on your credit, it's easy to see why that might make you a little more susceptible to a downturn," explained Schulz.

But not all lenders are expected to start using this new score.

"The truth is it takes a long time for these sorts of products to be adopted simply because lenders have their own systems and they have to work these new scores and these new changes into any system that they have," said Schulz.

And while the FICO Resilience Scale is meant to help you, it's important to keep your credit score healthy.

"It's about paying your bills on time, every time. It's about keeping your balances as low as you possibly can. And it's about not applying for too much credit, too often," said Schulz.

One way to help protect your credit rating during the pandemic is to ask your lenders for payment deferrals. Many are offering deferrals and will not report you as late.