A New Type Of Credit Score Is Coming
Published on February 27, 2019 by Nick Walsh
The current score system works well in that it provides a sufficient way to figure out low costs and in an automated way how likely someone is able repay you. But it has a disadvantage in that a lot of people don’t provide a payment history because they don’t have credit cards such as younger people and immigrants.
Ultra FICO changes that dynamic by using consumer contributed data. The Fair Isaac Corp., the creators of FICO, announced that Ultra FICO will be more widely released in April 2019. Alongside traditional metrics, the Ultra FICO looks at your banking behavior in 3 areas:
- Your account history
- Your account balance
- Your account activity
It gives consumers the ability to give permission for their data—rich data that can be used as valuable insight for lenders. It has the potential to score people that are considered unscorable and enhance existing scores. This may help people get better interest rates.
Marketplace.org reported that “there are 53 million people in the United States who do not have FICO scores, and the new Ultra FICO will catch 10 million to 15 million of those.”
Don’t look for Ultra FICO to replace the regular FICO score. Ultra FICO is voluntary, so it will likely be used to give more insight to lender if the regular FICO is not high enough to qualify the consumer.