FlexScore: An Alternative to Credit Scores?

July 8, 2014

When assessing your financial standing, looking at your credit score and figuring out ways to improve it are likely part of the process. However, evaluating credit scores alone may eventually become an antiquated habit, as a new financial assessment tool known as FlexScore may start to play a more powerful role in predicting financial standing and guiding people towards ways of improving this.

A new financial assessment tool known as FlexScore is attempting to provide a more complete evaluation of consumers’ financial standing and, ideally, become as important of a tool as credit scores.

A new financial assessment tool known as FlexScore is attempting to provide a more complete evaluation of consumers’ financial standing and, ideally, become as important of a tool as credit scores.

What is FlexScore?

Created by financial advisors Jason Gordo and Jeff Burrow, FlexScore is a more dynamic financial assessment tool that can essentially help people figure out how they are doing financially and what steps they should take moving forward in order to improve their overall financial standing.

This complex evaluation system gives people a score from 0 to 1,000 (with 1,000 being the best score possible) based on looking at individual’s:

  • Overall debt obligations
  • Savings accounts and other assets
  • Insurance policies
  • Estate planning factors that may be in place (such as wills, trusts, etc.).

Once a person has been assigned a numerical score (with most beginners starting out with a score of ~150), FlexScore then provides a specific “to do” list, outlining the various steps that people can take to improve their scores (and, consequently, their financial standing). Common “to do’s” on these lists include:

  • Getting credit cards with lower interest rates
  • Paying down debt
  • Taking out certain insurance policies.

Can FlexScore Replace Credit Scores?

Gordo’s and Burrow’s goals for FlexScore involve ultimately having this system become as important as credit scores are in evaluating people’s financial standing. While they certainly have a long way to go in order to achieve such goals, their intent is admirable and, in many ways, motivated by concerns for consumers.

As Gordo has stated, “the credit score is a black box logarithm that nobody understands. FICO invented it in the 1950s – it’s very confusing… our aim is to become an industry standard by which people measure themselves financially. It’s much more complete and complex than a credit score.”

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Categories: Blog, Credit Score