Student Loan Watch: FICO 08 and the Human Capital Score (HCS)

Today, there is a “loan gap” between federal grants and loans and the real cost of an education somewhere to the tune of $113 billion, some say – which means in addition to private student loans, more students are using or abusing credit cards, and families are tapping home equity lines to fill the gap. Never more than now has education been viewed as an investment – or indeed, an asset class in a portfolio.

The HCS is very different than the FICO 08, because a FICO score is based on actual payment history and the quantifiable details of a person’s particular credit history. The HCS is not based on a student’s payment history or length of history, since most students have no real history – but instead is based on academic history, achievements and choices.

What can the HCS tell you? It can help you decide, as an investor, whether a particular student loan is a reasonable risk and therefore, a good investment for you. It can also tell you as a parent if your child’s educational choices are trending toward a good future income or not. It could also determine what quality of student loan your child will be able to get.

Get the full SF Examiner.com article here.

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