NEW YORK (TheStreet) -- A happy person has no history, an old French proverb says. Perhaps, but try getting a mortgage or a car loan without proof of past credit use. Nearly impossible, until now.
A new way of measuring creditworthiness for those who have little or no credit history is set to hit the market soon, and that could mean more loans to more good borrowers. Good news for lenders, too, because some 15 million more Americans are expected to be scored by the new data, undoubtedly some of them worthy of a loan.
Millions of Americans don't have credit. They might be young folks who haven't taken out a car loan or developed a credit card habit. They might be immigrants, including both legal and undocumented, who rarely visit a bank. They might be Americans who simply avoid plastic and car loans -- a respectable choice. They might be among those indebted long ago who now want to avoid overspending, which, given the nation's financial mess over the past seven years, isn't unreasonable.
But shouldn't mortgage lenders give a careful person with no credit history the same shot at the American Dream as a person who borrows money on plastic, often at ridiculous interest rates, to dine out or go to the movies? After all, which one is more responsible? And why do we think it makes sense to push someone to take on credit card debt to prove his or her creditworthiness?
That's some of the thinking behind a new FICO (FICO) credit score for borrowers who have been using cash instead of credit -- the so-called "unscorable."