Do you wish you could get lower interest rates on credit cards or loans? Be careful what you wish for, because with a new pilot program known as UltraFICO—you may soon qualify for better rates.
For more than 30 years, your credit score has been based on your credit report. With the new UltraFICO Score, they’ll factor in more criteria like your savings, checking, money market account balances, and overall status of your bank accounts.
What does this mean?
This means you’ll have more resources from which to establish a desirable credit profile and a direct method to show you have the ability to pay back the loans or lines of credit you apply for.
Who benefits from the new credit scoring system?
- Those just starting out who have no FICO score. More than 15 million consumers without a score can now receive an UltraFICO score.
- Those with partners who have historically opened lines of credit for the pair, who are now interested in both partners attaining lines of credit.
With the new credit scoring system in place, seven out of 10 consumers with good financial habits can potentially benefit. In addition to UltraFICO, there’s technically another credit scoring system known as Experian Boost that may have a positive impact on credit scores. UltraFICO is from Fair Isaac who created the conventional credit score.
Experian Boost will be released later this year and it goes a step further by allowing lenders to review your utility payment history. Those with a demonstrated history of responsible utility payments have the chance to get their score “boosted” yet higher.
What you should know
By mid-year, lenders across the country will have access to the new scoring system, if all goes according to plan. For the immediate future, UltraFICO is being launched only at one of the three main credit agencies, Experian, so you’ll want to inquire of potential lenders and creditors which scoring system and credit bureau they use.
If you plan on applying for a loan or line of credit in 2019, and could use a boost to your score, be sure to check with the financial institution you are consdering. The other main credit bureaus, TransUnion and Equifax, have not joined the UltraFICO scoring system yet, so if 20-60 extra points can make or break you, you may want to seek an alternative lender who is using Experian and FICO scoring.