The UltraFICO Score Is on the Way and Your Credit Score Might Benefit
A recent article in The Wall Street Journal discussed the newly created UltraFICO score and its pending role in determining creditworthiness for many seeking credit.
The article “Want a Higher Credit Score? Soon Your Cash Could Help” is behind the Journal‘s pay firewall – subscribers can read the entire article at the link, non-subscribers, probably not.
The brief overview of the soon-to-be-available UltraFICO score is this…
The UltraFICO Score
Unlike the current FICO score which is primarily based on payment histories and amounts owed, the UltraFICO score will take into account an individual’s history of cash transactions, specifically looking at bank accounts which are in the individual’s name.
Which, on its face, sounds a bit too Big Brotherish to me, but eases concerns a bit when it’s made clear the individual seeking the credit determines which, if any, bank accounts can be considered.
The reason for incorporating bank accounts? It’s one more way to determine an individual’s probability of repaying the loan for which they’re applying.
And, it appears, the incorporation of bank accounts into the UltraFICO score isn’t so much about what banking transactions an individual makes; rather it’s considering that payments are being made from the bank account without overdrawing being an issue.
According to the Journal article, the amount of money actually in the bank account really isn’t a major factor, either. AnnaMaria Andriotis, the author of the article includes in her piece, “Consumers with an average balance of at least $400 who haven’t overdrawn in the prior three months would likely get a boost, FICO said.”
For anyone who has at least a basic understanding of personal finance and who is not in a dire fiscal situation, these UltraFICO score criteria should be fairly easy to attain, thus raising the overall FICO score…if needed.
The “if needed” part is important considering the UltraFICO score, at least at its introduction, will not be an automatic consideration for those seeking credit.
The UltraFICO score will only be incorporated into the decision-making process if a borrower’s FICO score falls short and the individual wants to have his/her banking history considered as well.
Look for the UltraFICO score to be an option sometime in 2019.
Wrap Up
The UltraFICO score is a newly created, yet-to-be-introduced addition to the traditional FICO score.
It incorporates a borrower’s bank account activity when decisions on creditworthiness are being made. But only when those seeking credit need or want an added boost for credit approval.
Those who are Miles and Points hobbyists, or utilize our credit card strategies to better their overall financial situation, likely will never need to incorporate the UltraFICO process into their credit applications.
For those just starting to build a credit history, or those who are in the process of rebuilding, however, the UltraFICO score just may be the assist needed to turn a decline into an approval.
image courtesy of Stuart Miles at freedigitalphotos.net
