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Credit scores will get more personal

Credit scores will include estimates of annual income. FICO is developing separate credit scores to incorporate any payday loans, evictions, and child support payments.

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The change comes at a time when the average FICO scores of homebuyers who qualify for loans continue to rise, as mortgage lenders reward the most creditworthy borrowers with low rates and tack extra fees onto loans for those with lower credit scores.

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In a report last year, the Woodstock Institute, a Chicago-based research and advocacy group, found that residents in Illinois' "communities of color" were far more likely to have lower, "non-prime" credit scorescompared with people in predominantly white communities. Statewide, 20 percent of people had a credit scoreof less than 620, which meant they had a hard time qualifying for a mortgage as well as other forms of credit.

Among other ideas, Woodstock recommended that businesses report on-time and delinquent payment histories for items such as rent, health care, utility and cellphone bills, to truly determine a person's default history.

"Any time you can get a fuller picture of a customer's risk profile, it makes it more likely that they can get the product they are most suited to," said Tom Feltner, Woodstock vice president. "The concern, of course, is what is that information and does it reflect the rate of default?"

There also are concerns about whether inquiries and charge-offs from payday and online lenders should be included. "Payday loans are extremely onerous," said Chi Chi Wu, a staff attorney at the National Consumer Law Center. "They trap people in a cycle of debt. To report on them is to cite that person as financially distressed. We certainly don't think that's going to help people with a credit score."

The extra information may also help more affluent homeowners who aren't on the credit grid.

Two years ago, David Pendley, president of Avenue Mortgage Corp., worked with a client, a college professor, who didn't believe in using credit. "He was putting down 40 percent and he had the hardest time getting a loan, even though he had $120,000 in the bank and he was 22 years on the job."

Eventually, Pendley secured a loan for the customer through a private bank, but he paid for it. "He didn't get the lowest rate possible," Pendley recalled.