How the New UltraFICO Credit Score May Benefit You

FICO® is a credit score created by Fair Isaac Corporation that's meant to show a person's likelihood of paying back debts on time. Lenders look at credit scores like FICO when they decide whether to offer someone a loan.

However, millions of Americans don't have credit scores because there isn't enough information about their financial history to calculate a score. People who are credit invisible—meaning they don't have credit history with any of the big three credit reporting companies, Equifax, Experian and TransUnion—may have trouble getting a loan or credit card.

Now, UltraFICO™—a new credit score—allows more people to get a score and potentially qualify to borrow money.

What is an UltraFICO score?

An UltraFICO score is a credit score that accounts for your banking activity, how much money you have in savings and your transaction history. You can opt in to get this score by signing up on the FICO website and linking your checking, savings and money market accounts.

The UltraFICO score is offered through a joint partnership FICO has with Experian and Finicity. It's available through a small group of lenders as part of a limited pilot phase for consumers who either can't access credit or who could be eligible for better terms. Its purpose is to fine-tune deployment of the score. As this phase draws to a close, the UltraFICO score will be more broadly available.

How an UltraFICO score compares to a standard FICO score

A standard score is based on five main factors: how much money you owe, your payment history, the length of your credit history, whether you've opened many new credit accounts recently and the mix of different types of credit you use. People who haven't taken out a loan before or who haven't used credit cards might not have enough information on their credit report to generate this score.

While everyone with at least 6 months of credit history has an automatically generated FICO score, only those who opt in get an UltraFICO score. The new score looks at the same factors, but it also uses additional information from your checking, savings or money market accounts. It considers how long you've had your bank accounts open, how often you make transactions and whether you have any recent transactions. It also looks to see if you have a history of positive account balances and if you consistently have money in your bank accounts.

What are the benefits?

The new score gives people the chance to prove that they're responsible with money, even if they don't have a credit history. This allows people to escape the catch-22 of borrowing for the first time—you need credit to get the best loans, but if you don't borrow, you can't establish credit. With this new initiative, you can get a credit score and improve that score before applying for a first credit card or making a first loan application. And for someone who hasn't used credit recently or who's had trouble with payments in the past, the new score is an opportunity to demonstrate the financial progress they've made.

The new score also gives lenders a more complete picture of applicants' creditworthiness, and it makes it possible for lenders to offer credit to applicants they might have overlooked under the standard credit scoring system.

Who should opt in?

People who have no FICO score or a low score and who have at least one checking, savings or money market account may benefit from opting in, as long as their banking activity shows a stable pattern of having funds in their account.

On the other hand, people who often have negative balances or who only recently opened a bank account probably won't gain much by opting in. And anyone who already has a high FICO score doesn't have much reason to opt in because their score isn't likely to change.

If you don't have a credit score yet or if your score is low, opting in to the UltraFICO score could help you demonstrate to lenders that you're a good credit risk. This could improve your chances of getting a loan, which can allow you to continue building your credit history.