What Is UltraFICO? Giving You a Voice in Credit Scoring

There’s a new FICO credit score on the horizon and it appears to be different from any FICO Score lenders or consumers have ever seen before. While only the future will tell whether the lending market ultimately chooses to adopt the scoring option, the new UltraFICO Score will make its initial debut to the world in early 2019.

According to the joint press release from FICO, Experian, and Finicity, UltraFICO is scheduled to launch as a pilot program for select lenders in the early part of the new year. Assuming all goes well with the pilot, the next phase will be to make the score “broadly available” to lenders by mid 2019.

What Makes the New UltraFICO Score Different?

Fair Isaac Corporation has been making FICO credit scores since 1989. FICO Scores are currently the most popular brand of credit scores used by lenders in the United States, by a long shot.

Want to see where your credit scores stand? Learn how to access your FICO scores for free here.

You actually have dozens of credit scores associated with your name and credit profiles, not just one. Lenders use these different credit scoring systems, like FICO and VantageScore, to help determine the creditworthiness of applicants for credit cards and loans.

Yet UltraFICO will be different from the traditional FICO Scores you’ve come to know and love (or hate, depending upon your past experiences). For the first time ever you, the consumer, will have the ability to voluntarily add information for FICO to consider during the credit score calculation process.

All previous versions of FICO Scores have been designed to evaluate the information contained in your three traditional credit reports from Equifax, TransUnion, and Experian. Information outside of your credit reports has been irrelevant from a credit scoring perspective.

UltraFICO represents the first departure from this design in three decades. The new opt-in score enhancement will allow you to voluntarily add data to be considered when predicting your level of credit risk. Specifically, you can choose to allow UltraFICO to view and evaluate your bank transaction data (money market accounts, checking accounts, and savings accounts) alongside your Experian credit report for a chance to improve your credit score.

The “consumer-centric” approach to credit scoring, as FICO describes the new scoring system, may be helpful to subprime consumers whose credit scores currently fall slightly below a lender’s cut-off point for approval. UltraFICO is also touted as beneficial for consumers whose traditional credit reports currently don’t qualify for a credit score (in other words, they don’t contain enough recent data to meet minimum scoring requirements).

How does UltraFICO work with other FICO Score versions?

UltraFICO works to adjust an existing FICO Score. If a lender uses the UltraFICO scoring process, you may be invited to participate when you apply for new credit.

When you opt in, your bank account data is considered alongside the credit information and other data your lender’s FICO scoring algorithm already reviews. The lender is delivered both scores — the traditional FICO Score and the UltraFICO enhanced score — so it can compare them side by side.

Key Details

Like any other credit score it creates, FICO won’t release the true blueprint or algorithm to show the world exactly how UltraFICO works. That information is proprietary. It’s FICO’s secret sauce, if you will, and not something which the company wants competitors to see.

Still, some basic information has been made public. Here are a few key takeaways from what is known about UltraFICO so far.

  • Limited availability: UltraFICO will not be available at all three credit bureaus initially. It will only be available through Experian. So, if your lender uses an Equifax or TransUnion credit report and score to evaluate new credit applications, UltraFICO isn’t going to help you.
  • Not used for mortgages: Due to the fact that UltraFICO isn’t scheduled to be available at Equifax and TransUnion yet, the new score option won’t benefit consumers who are applying for a mortgage, at least not initially.
  • Good for responsible consumers: According to FICO, the new score could help consumers who “exhibit responsible financial behavior” as demonstrated through their bank account histories.
  • What does “responsible” mean? “Responsible financial behavior” is defined by FICO as evidence of savings, a healthy average balance of $400 or higher, maintaining a bank account over time, avoiding negative account balances, and regular use of a bank account to pay bills or make other transactions.
  • Could hurt some consumers: If your bank account history doesn’t meet the previous criteria, opting in and allowing your financial data to be considered probably won’t help your UltraFICO Score. In fact, there’s a chance the data could hurt your score instead.
  • Security concerns: UltraFICO raises some data security concerns (as does any credit report or score). When you opt in and allow your bank account data to be accessed, you will be required to disclose sensitive personal information such as usernames and passwords for your financial accounts. Yes, Experian already has access to a massive amount of personal data (yours along with the data belonging to some 220 million other consumers). Still, you will voluntarily be granting access to more of your information. It’s worth considering. Some subprime card issuers, like Deserve, already ask for bank account access so this isn’t unheard of.
  • Not a big deal for people with good credit: UltraFICO is primarily being marketed as a way to help consumers with low credit scores and consumers with thin credit files who may fall just below a lender’s score cut-off for approval. If your credit scores are already in good shape, you might not see much benefit from the new system. Time will tell.

With the recent prevalence of data breaches, including the massive Equifax data breach, you may rightly hesitate before providing your bank account usernames and passwords. If you have poor credit and are looking for a boost it may be worth it to you, but if you already have average or good credit there’s probably no need to increase your risk by providing this very sensitive information.

Keeping Things In Perspective

While the new UltraFICO could usher in some potentially exciting changes for consumers, it’s also important to be realistic in your expectations. The new score isn’t likely to change the landscape of traditional lending overnight. It might not change the way most traditional lenders do business at all.

Changes in the credit world traditionally move at a very slow pace (think frozen molasses flowing uphill). Even if lenders are intrigued about the idea of being able to grant credit access to a larger base of consumers, it will still take time before the new enhanced score is potentially adopted.

Why? Because adopting a new scoring system can be a costly, time-consuming endeavor for any lender to undertake.

Even though UltraFICO may boast improved predictive analytics, lenders will want to be sure that the benefits outweigh the costs of purchasing and implementing the new score. Additionally, lenders typically want time to test the effectiveness of a new credit score themselves — a test drive, if you will — before deciding to use it on a large scale basis for lending decisions.

Nonetheless, a new credit score which allows you more control is something special. It represents an exciting departure from the way credit scoring has worked for the past 30-odd years. Change won’t take place over night — not in the credit world — but UltraFICO may certainly be cause for a little hope and optimism among American consumers.

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