UltraFICO: New Score Can Boost Consumers With Little, Weak Credit

The most widely known and used credit scoring system will offer a new variation that could help consumers with little or poor traditional credit. The new UltraFICO takes into account a consumers checking account transactions, and the ability to maintain balances and savings.

FICO scores currently range from 300-850. Usually a higher score makes it easier to qualify for a loan and may result in a better interest rate. Like all credit scores, however, FICO scores can change over time according to credit behavior — the ability to accumulate loans and credit cards and pay down balances on time.

FICO’s traditional credit scores rely only on information about a person’s credit usage and payment history drawn from the person’s report at one of the three big credit bureaus, Experian, Equifax, and TransUnion.

The new Ultra score is designed to help those who would be denied credit because their traditional score is too low or they have no credit history. FICO says Ultra provides a “second chance” for borrowers after lenders have pulled their traditional FICO score.

There is some concern, however, that ome lenders may examine an Ultra score before looking at a potential borrower’s traditional score. In thoses cases, the new score could hurt borrowers who otherwise might have gotten credit or loans, or better lending terms.

FICO says that with Ultra, a “consumer grants permission to contribute information from banking statements, including the length of time accounts have been open, frequency of activity, and evidence of saving…”

Experian, FICO and Finicity project that this new score could improve credit access “for the majority of Americans and is particularly relevant for those who fall in the grey area in terms of credit scores (scores in the upper 500s to lower 600s) or fall just below a lender’s score cut-off.”

The UltraFICO Score will launch as a pilot program in early 2019.

“This changes the whole dynamic of the lender and customer relationship,” said Jim Wehmann, executive vice president, Scores, at FICO. “It empowers consumers to have greater control over the information that is being used in making credit risk decisions. It also enables a deeper dialogue between the consumer and lenders to help both parties make better financial decisions. It’s a game changer.”

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