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Credit Scores and Reports

New FICO score focuses on how much money you have in the bank


For the first time, a FICO credit score will take into account how much money you have in the bank, instead of your credit history.

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FICO, the country’s most prominent provider of credit scores, is adding a major twist to its credit-scoring model that, for the first time, will take into account how much money you’ve got in the bank.

For many consumers, this could result in higher credit scores and, therefore, the ability to borrow more money with credit cards and loans.

FICO said Oct. 22 that the new UltraFICO score, being developed in conjunction with credit reporting bureau Experian and financial technology company Finicity, is aimed at improving access to credit by considering data that “reflects responsible financial management activity.” Consumers must give approval for data from checking, savings and money market accounts to be used in computing the UltraFICO score.

That permission will enable FICO to look at money management factors, such how long bank accounts have been open, how often withdrawals and deposits are made and how much money is stashed in savings. FICO said the new scoring method will “provide an enhanced view of positive financial behavior.”

As it stands now, FICO’s traditional scoring model depends only on information from your credit reports, mostly related to credit cards and loans: payment history, debts vs. credit limits, length of credit history, mix of credit types and new credit. No information about banking activity appears in credit reports.

A news release about UltraFICO explained that for the majority of Americans, the new score could lead to easier access to credit – meaning better odds of being approved for credit cards and loans. That would be particularly true for consumers with credit scores in the upper 500s to lower 600s. A FICO score ranges from 300 to 850; the average score in the U.S. recently reached an all-time high of 704.

“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,” FICO said.

FICO said UltraFICO will be rolled out to lenders, such as credit card issuers and mortgage companies, in mid-2019. It’ll be tested in a pilot project launching early next year.

See related: New tools help take the guesswork out of improving credit scores industry analyst Ted Rossman offered a couple of cautionary notes about UltraFICO.

For one thing, Rossman said, the “possible unintended consequence” of relying on banking data to create a FICO score will be a greater focus on your income and assets.

“Historically, your FICO score has been affected by how well you manage your money, not how much money you have,” he said.

In addition, according to Rossman, UltraFICO might not necessarily be a positive for consumers.

“While this generally sounds like a good thing for consumers, the concerning part – the solution in search of a problem, if you will – is the focus on boosting [credit] approvals,” he said. “Fairness is a good goal. Going in with the idea of increasing approval rates is a slippery slope.”

Rossman also noted that updates to credit scoring models can take a while to have an impact.

“FICO’s last big update, FICO 9, came out in 2016, but the most common system being used by lenders is still FICO 8,” he said.

Jim Wehmann, executive vice president of FICO, called UltraFICO a “game changer.”

“This changes the whole dynamic of the lender and customer relationship,” Wehmann said in the news release. “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.”

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