New Score, Who this?! Meet the new Ultra FICO Score.

New Score, Who this?! Meet the new Ultra FICO Score.

Credit Score.

A three digit number that can determine if you can rent an apartment, buy a house, get car insurance or even a job. Those three numbers that range from 300-850 hold a ton of power in the lively-hood of many. Been there, done there, got a t-shirt and fixed my credit.

Tea: Existing scores primarily focus on an individuals repayment history. Like this:

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The creator of said score - Fair Isaac Corp. (FICO for short) is going to be changing the landscape for how our scores are calculated. They are bringing the new model Ultra FICO® pilot into market in early 2019. The new ‘score’ should make it easier for people with imperfect scores to qualify for credit. It will be implemented through Experian, with borrower data aggregated through Finicity.  

The twist? This score is optional based on your traditional scores being curved/denied. Seriously. Lenders will look at more information to determine approval, including data from consumers' checking and savings accounts. Yes, you read that correctly.

While the factors could work in your favor, this doesn’t necessarily mean that we will all have a perfect credit score. This could be seen as a win, if only you gather the overall strategy on these changes. One thing that is appealing is the axing of history of negative balances; this score calls out your habits of S&S: spending and saving.

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FACT: 53 million people in the United States do not have FICO scores. Yet with the new Ultra FICO® will catch 10 million to 15 million of those.

Back to the new-new. Ultra FICO® will be an optional extra that lenders can use when an individual is denied based on their traditional FICO score. The new score takes full snapshot of:

  • Current checking balance

  • Length of checking history

  • Transaction frequency

  • Overdraw history

What is interesting about this is that you will be able to choose which checking accounts they want to be considered when scores are recalculated using Ultra FICO®. It also means that you have to make sure that you keep those accounts in order (overdrafts beware). The thing is that FICO also didn’t disclose where they will be pulling your banking account information from. That part seems shady as an eclipse.

This new Ultra FICO® Score in simple terms: secondary scoring model that is only used when you would have originally already been denied.  I can see this working moreso for secured credit card applications who scores fall withing the grey areas of scores in the upper 500s to lower 600s + have an average balance of at least $400 who haven’t overdrawn in the prior three months would likely get a boost.

FACT: Of U.S. consumers with FICO credit scores, a record 58.2% have a score of 700 or higher on a scale that tops out at 850. The average FICO score is at a record 704. Experian considers scores under 670 subprime.

My thoughts? I think that this optional score is a good thing for those who have a strong chance of being denied. But the thing that concerns me is that lenders will not let applicants know about this alternative. My charge to you would be to check your credit scores and overall financial status before you apply for credit. Pull your Vantage Score, not Credit Karma or Credit Sesame. Most banking institution offer up your vantage score by law. Stay ready before you have to get ready. This score is a good step in the right direction from the housing crash nearly a decade ago, but there is more that needs to be done. We shall see how this new ting (thing) impacts the masses as roll out goes on.

The Ultra FICO® Score is slated to be broadly available to lenders mid-2019.

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