The new UltraFICO score could improve access to credit for consumers. Here's how it will work

A new FICO credit score, launched in 2019, could be good news for consumers who do not quite have the credit ratings they need to qualify for a financial product or for the conditions they were hoping for .

The UltraFICO score is a registration credit template that uses information from your chequing, savings or money market accounts to supplement the data already contained in your credit report. The information taken into account includes the amount of your savings, the duration of opening of your accounts and their activity. It is designed to improve your existing FICO score, which ranges from 300 to 850.

If you already have an excellent line of credit and do not need additional points to get approval or qualify on the best terms, you will not be offered. But this additional information can be particularly useful for consumers whose scores are in the top 500 to the bottom 600, considered bad at fair credit.

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The UltraFICO score – distributed by the Experian Credit Bureau, one of the top three reporting agencies – will be the subject of a pilot test "with a few lenders", including online, Non-traditional lenders and credit unions, as of early 2019, said David Shellenberger. senior director of scores and predictive analysis at FICO.

Here are the answers to the most frequently asked questions about the new credit score:

Shellenberger said the UltraFICO score is almost a "second chance score" that generally benefits two groups of consumers:

Beginners in credit are more likely to see a significant advantage, assuming they have not had a negative account balance in the last three months and are maintaining a decent savings balance. (Shellenberger spoke of a "moderate amount" of savings, meaning $ 400 or more.)

FICO said that among consumers who had retained a positive balance on a deposit account and averaged at least $ 400 on a savings account, 70% improved their scores with the addition of this information. Shellenberger said that 40% of newcomers in credit registered an increase of 20 points or more. Among those who had already experienced financial difficulties – for example, an account in collections – one in ten had an increase of 20 points or more, he said.

FICO scores have increased in general. The most recent average score, published in September, was 704, up 3 points from a year ago. According to FICO data, 22.6% of consumers had a score between 600 and 699 – the main candidates for credit approval if they could handle a few more points.

The UltraFICO option will probably be available if:

Shellenberger said FICO planned to make UltraFICO generally available later in 2019, probably in summer.

The new score takes into account deposit accounts, such as savings accounts, as well as some account activities (PayPal and Venmo, are you kidding?).

"It almost seems like this allows very large" dinosaur "type lenders to compete with the more agile online lenders who rely less on traditional credit report information and more on cash flow indicators," he said. credit expert John Ulzheimer.

Ulzheimer said that he was intrigued by the new score and that he was seeing the pros and cons.

The main advantage is that you can get credit for banking done outside traditional institutions.

The biggest disadvantage? Communicate even more personal data and hope that they will be properly protected.

Ulzheimer thinks that UltraFICO is most likely to be offered to people to whom approval has been denied, but hardly – "almost there, but not beyond the line of". arrival".

FICO has another model designed to help tag more people and uses non-traditional data.

The FICO XD score, which is always used, generates scores to help people who do not have traditional credit score to qualify for credit cards.

However, the XD score does not require you to have a deposit account like UltraFICO does.

Another difference is that UltraFICO is designed for wider use – loans as well as credit cards. Partitions can therefore serve slightly different consumers.

Bev O. Shea is a writer at NerdWallet. Email: boshea@nerdwallet.com. Twitter: @BeverlyOShea.

The article New UltraFICO score could improve access to credit for consumers, which was originally on NerdWallet. NerdWallet is a USA TODAY content partner offering information and feedback on personal finance. Its content is produced independently of USA TODAY.