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Millennia have the impression of being held back by their credit score. Sam Berman of Buzz60 has all the history.
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Credit score chart indicated by one to five stars, the five-star box being checked with chalk.(Photo: Getty Images)

You could soon earn a higher credit score if you balance your checkbook responsibly.

FICO, the developer of the most used credit rating, is releasing a new score next year, which deals with the management of your chequing, savings and money market accounts, as well as the repayment of your credit cards and loans.

This additional information could help improve the credit ratings of some of the 79 million Americans who have poor credit history, as well as the 53 million who have no credit rating according to the traditional FICO model. This could help them get a credit card or a loan.

"We have focused on financial inclusion and what we have done can potentially improve access to credit for the majority of Americans who participate," said Sally Taylor-Shoff, vice president of scoring. at FICO. "Beginning consumers in credit as well as those who have already had financial difficulties, these groups will benefit the most from the new UltraFICO score."

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How it works?

If your credit score is not high enough to qualify for a loan or a credit card, or about to get a better rate, a lender can offer to use your banking business to generate a score UltraFICO. You can also choose the accounts (checking, savings or money market) to take into account in the recalculation. The score uses the same range of 300 to 850 as the other FICO scores.

"It's like combining peanut butter with chocolate," says John Ulzheimer, a credit expert who previously worked for FICO and Equifax. "(These are) two useful data sources, combined into one score."

Experian, one of the top three credit bureaus, will collect your bank account data with the help of Finicity, a financial technology company, and will send the new score as well as a summary of your accounts bank to the lender for a second assessment. Experian will retain the bank account data to resolve any dispute regarding accuracy.

According to Taylor-Shoff, it is possible that your credit score decreases after adding new banking information. It is important to understand when your bank account could help you.

What is a good bank account?

The main factors are the average account balance and the history of overdrafts. Those who maintain an average balance of $ 400 and have no negative balance in the previous three months will benefit the most from the UltraFICO score, says Taylor-Shoff. Other positive factors taken into account by FICO:

  • Have more deposits than exits.
  • Have an account open and active for a while.
  • Pay regular bills such as utilities and rent these accounts.

Seven out of ten people who demonstrate responsible behavior with regard to checks and savings accounts can improve their score in the UltraFICO rating system, the company added, some up to 20 points. This can result in a lower interest rate or the difference between an approval and a refusal.

And after?

The new score begins its pilot program early next year. FICO plans to offer the scores to all lenders by this summer. Pentagon Federal Credit Union, the third-largest credit union in the United States in terms of assets, participates in the pilot program.

Taylor-Shoff said that many lenders are interested in the new score. But it remains to be seen how quickly lenders will adopt this additional rating system. For example, the last credit rating of FICO – FICO 9 – was published four years ago, but the previous version of this rating – FICO 8 – remains the most widely used.

"You can build the best mousetrap in the world, but if nobody buys it, it does not matter," says Ulzheimer. "In some ways, FICO can be a victim of its own success."

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