A good FICO score without a credit card

Today, credit rating bureau Experian rolled out the "Emerging Credit Score, a new credit scoring tool to assist lenders in evaluating the creditworthiness of unbanked and underbanked consumers."

The Emerging Credit Scores, and similar programs from the other bureaus, rely on telephone and utility bills, and catalog/internet purchase histories to arrive at a credit score.

The Wall Street Journalreports (subscription required) that "the new scores could be good news for those who pay their bills promptly but don't have established credit histories. In the past, banks often ignored this group because they had no way of evaluating the risk."

This is great news. For too long, it's been difficult to establish a good credit score without using credit cards. That's no problem if you use your card responsibly but, according to CardTrak, 60% of people don't pay off their credit cards every month. In addition, a Dunn and Bradstreet study found that credit card users spend 12% to 18% more when using a card instead of cash. This is wonderful for retailers but bad for you.

We should reconsider the notion of getting a credit card to build credit. Innovations like the Emerging Credit Score are making it easier to qualify for a mortgage without getting involved with credit cards, and that's a great option for a lot of people.
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