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What if balancing your checking account or having a high balance in your savings account, could help you have a higher credit score? That is exactly what may happen next year with the rollout of the UltraFICO Credit Score by FICO, Experian, and Finicity. The UltraFICO Credit Score is different because it's created using banking information along with information on how you pay back your loans and pay off your credit cards.
With this new information added into the credit score mix, the UltraFICO Credit Score will also reflect the individual's ability to manage their finances sensibly. It is seen as a way to create a realistic credit profile for consumers who may have had trouble accessing credit in the past. "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," he added.
The UltraFICO Credit Score was announced during Money 20/20, a FinTech and financial services conference. A pilot program is slated to start next year.
How it works
How does is the UltraFICO Score created? Consumers give Experian and Finicity permission to take a close look at their banking information, which includes exploring everything from how long they have had their accounts and account activity to the amount in their savings and money market accounts.
All of this information is accessed electronically by Finicity, and in turn, that information is teamed up with consumer credit information provided by Experian, so they can create a credit score based upon all this information.
Upping credit scores for some consumers
They believe that by adding this new data into the mix some consumers will have a better chance to access credit. This is especially true for people who have do not have an extensive credit history or those who have had issues in the past and are trying to get their credit back on track.
This typically means consumers who have a credit score that falls in the upper 500† to lower 600† range, as well as those individuals with a score that is just under the lenders cut off point for approving a loan or credit card.
"This approach allows Americans to benefit from positive financial behaviors," said Steve Smith, CEO, Finicity. "We are proud to have created a new way for consumers to share financial information, safely and securely so that a new UltraFICO Score can be created."