Due to FICO’s method of calculating credit scores, millions of consumers kept out of mainstream credit. You must have at least one account that’s been open for at least six months for FICO to generate a credit score for you. Without adequate credit, consumers can have trouble getting approved for credit cards and loans from traditional lenders.
Experian®, FICO® and Finicity® announced a new credit score during the Money 20/20 USA conference. The new score, called UltraFICO Score, leverages account aggregation technology and distribution capability from Experian and Finicity to help consumers improve access to credit by tapping into consumer-contributed data, such as checking. Savings and money market account data. That reflects responsible financial management activity.
This 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.
Including Bank Information in Credit Scores | UltraFICO Score: FICO’s New Credit Score System
While credit card issuers and lenders typically ask for income on the application. The information isn’t verified and it’s not included in your credit score. With UltraFICO Score, 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, which can be electronically read by Finicity. And combined with consumer credit information from Experian to provide an enhanced view of positive financial behavior.
This new score has the potential to 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. Consumers who are relatively new to credit with limited history or those with previous financial distress that are getting back on their feet stand to benefit the most.
Ultimately, UltraFICO allows lenders to expand the number of consumers they can loan money to. It allows lenders to tap into the more than 130 million consumers who are effectively shut out of the credit system because they don’t meet the qualifications.
How to Get an UltraFICO
Not all consumers will have UltraFICO; if your credit score is high enough to have an application approved, you won’t need the extra boost from your banking information. The lender may offer the UltraFICO score to you if your application is turned down based on your traditional credit score. At that point, you’ll have the option to have your bank information accessed to generate an UltraFICO score for you.
Experian will be the first bureau to partner with FICO for the new credit score system. For UltraFICO to benefit you. The lender must be willing to base their credit decision on your Experian credit score alone.
Keep in mind that agreeing to an UltraFICO means allowing these companies to electronically access your bank information. Make sure you understand how your data will be protected before going forward.
How the UltraFICO is Calculated
The traditional FICO score was calculated thus: 35% is based on credit history, 30% on your level of debt, 15% on your credit age. 10% on the types of credit you have, and 10% on the number of recent credit inquiries.
Many of the specific details about the UltraFICO score haven’t been announced yet. No information is given yet about how the percentage of each credit score factor changes with the addition of bank information. If you’re turned down or approved for less favorable terms based on your UltraFICO. The lender is required to disclose the score to you along with the factors that contribute to your score.
You still have a responsibility to make sure you only take on debt you can afford to repay. Consider your current income and expenses before taking on any debt obligations.
