New products

New score helps users gauge financial health

Kelly Dilworth

If you need some help sorting out your personal finances, but can’t yet afford a financial adviser, a new online tool called the FlexScore may help temporarily plug the gap.

Launched in October, the FlexScore is a free online tool that helps users figure out how well they’re doing financially and learn about different steps they can take to shore up their personal finances.

Unlike traditional credit scores, the FlexScore doesn’t factor in your payment history, so it can’t tell you how likely you are to qualify for a low-rate loan. Nor does it tell you anything else about your credit history.

However, it can help remind you about any last-minute financial steps you still need to take to boost your financial security (such as finally setting up that emergency savings fund or upping the amount of cash you contribute monthly to your IRA). And — with the help of colorful pie charts and graphs — it also makes it easier for you to visualize where you stand so that you have a better idea of which areas you need to concentrate on.

Lengthy setup
Curious about how FlexScore measured up to similar financial tools, I set up an account and tried the system out. It takes some time to get started — particularly if you’re unwilling to link your financial accounts to the site.

FlexScore asks you to enter detailed financial information — including your estimated income, assets, debt loads and insurance data — then generates a “personal finance score” based on the information you entered.

The score is unlike any other educational score on the market, so it’s hard to gauge what it really means. It not only completely ignores your credit history (for all FlexScore knows, you could have a bankruptcy or a 60-day delinquency marring your record); it also uses a different scoring metric than other scoring systems, such as FICO (the lowest available FlexScore score, for example, is 0 while the highest available score is 1,000) and, for now, bases its score purely on self-reported information.

That makes its usefulness for assessing your personal finances pretty limited — particularly since your credit health is an important indicator of how likely you are to meet your other financial goals. However, if you pair it with other credit-centric tools — such as Credit Karma’s free educational score, which gives specific advice on how to improve your credit score, or Experian’s $40 Credit Educator service — then it can be useful for gauging what else you need to do to boost your financial health.

The personalized profile offered by FlexScore, which uses pie charts to illustrate where your finances are, is similar in style to the ones offered by Quicken and Mint. However, FlexScore goes a step further by offering specific financial advice that’s tailored to the information you submit.

If you follow through on a recommended step — say, by setting up the living will you’ve been meaning to write for years — then you’ll add extra points to your score. You can also earn additional points by watching an educational video, reading an article or by signing up for a financial product plugged by the site.

FlexScore’s financial recommendations were, for me, the most useful aspect of the service. It’s hard to remember the many different steps we’re all supposed to take to keep our finances chugging along, so it was nice to have the reminder — even if I wasn’t interested in a specific product.

That said, I wished that the site included a more complete financial picture of how well I was doing financially. I’m also dubious about the site’s other big claim, which argues that banks and creditors may one day use the FlexScore to assess your financial health.

A credit score supplement?
In the Frequently Asked Questions section of the website, FlexScore announced a colossal ambition for a score generated by self-reported information: “Our goal is to make your FlexScore as prevalent and useful as your FICO score,” wrote the company. “This would allow banks and any other financial institutions that need to know how well you are doing financially (not just with your credit) one more way to verify personal financial responsibility.”

In an interview with U.S. News and World Report’s Kimberly Palmer, FlexScore co-founder Jason Gordo made an even more audacious claim: “We have to build a bigger following first — before banks and institutions would take us seriously as a financial success score when evaluating people who would borrow money — but two or three years down the road, your FlexScore will be important,” said Gordo.

That’s a big assertion for a score that uses information you added yourself and that can be manipulated by pretending to read articles or buy certain types of products.

The FlexScore is a nice tool for educating yourself about your finances and identifying steps you need to take to improve your financial lot. But I doubt creditors will be convinced that the FlexScore in its current form is an objective and trustworthy gauge of a user’s financial health.

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