November 15, 2018
Starting next year, there will be a new FICO credit score that you can opt into. UltraFICO will take a look at your bank accounts to see your balances and if you have a good track record of avoiding overdrafts. The program is voluntary—you have to give the green light before your bank accounts will be checked.
The score is meant to help people with low credit scores by giving lenders more insight into whether someone might in fact be a good client. The new score is being positioned as sort of a “second chance” for consumers with low credit scores.
While I applaud any effort to move credit scores from just tracking loans and credit card behavior, I don’t want any of you to think that the new UltraFICO is a big win. For starters, it’s going to be months before the new system launches, and there is no saying whether lenders will quickly start using the new score.
And even if you do opt to share your bank information, I think it could be an expensive mistake. If you have a score in the low 600s, or lower, I am concerned that any business that uses the UltraFICO to change its mind and give you a loan, or a credit card, is going to offer you a very expensive deal. Don’t for a minute think that UltraFICO will magically make you eligible for deals typically offered to someone with a 740 FICO score if your score is 640.
My advice is to stay laser focused on steps you can take to raise your traditional FICO score into the 700s. That’s the best way to get a lender or card issuer to give you a good deal.