Something New is Coming to Credit Scoring – The Ultra FICO Score
The Fair Isaac Corporation is partnering with Experian and Finicity to release a new credit score. FICO was founded in 1956 by engineer Bill Fair and mathematician Earl Issac. As the most commonly used credit scoring model, FICO Scores have been used for decades in the vast majority of lending decisions. Now FICO aims to help lenders provide more access to credit for consumers with limited credit history with a new score: UltraFICO.
Current scores are developed through a focus on an individual’s repayment history, credit history length, and types of credit such as installment or revolving. UltraFICO is designed to take into account an individual’s history of cash transactions, allowing lenders to lend to more borrowers. This new score may use it when an individual is denied based on their traditional FICO score. UltraFICO will look at things such as:
- Current checking balance
- Length of checking history
- Overdraw history
- Transaction frequency
The UltraFICO Score helps empower lenders by turning a loan application from a potential “no” into a possible “yes,” growing a lender’s business. The new score was designed to be particularly effective for consumers who fall in between scores in the high 500s and low 600s, or just below a lender’s score cut-off. The new scoring includes consumer-permission data and may impact approximately 15 million consumers who currently do not have a FICO Score.
The new UltraFICO Score is scheduled to launch in 2019.
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