Your Money Adviser: New Type of Credit Score Aims to Widen Pool of Borrowers

“People manage their money in all sorts of weird ways,” she said. “We’re not sure what the assumptions will be.”

The move by FICO comes as lenders are seeking new customers and as new financial technology companies are offering alternative ways of assessing consumer creditworthiness.

“This is all about giving banks a bigger pond to fish in for customers,” Matt Schulz, chief industry analyst at CompareCards.com, said in a statement on the scoring option.

It’s not clear if the other two credit bureaus will eventually offer UltraFICO along with Experian. TransUnion said in an emailed statement that it “applauds all efforts that promote financial inclusion and expand economic opportunity.” Equifax didn’t respond to a request for comment.

Here are some questions and answers about credit scores:

How much of a boost can my credit score get from UltraFico?

Some borrowers may see an increase of 20 points or more, Ms. Taylor-Shoff said, depending on the details of their financial profile.

How can I improve my traditional credit score?

Credit experts suggest paying your bills on time each month, keeping your credit card balances below the card’s maximum and limiting the number of new accounts you open.

What lenders and institutions are using UltraFico?

FICO identified Pentagon Federal Credit Union, one of the largest credit unions, as an institution interested in participating in its UltraFico test, but declined to name others. PenFed, through a spokeswoman, said it is too “early” to comment. FICO expects to make the new score widely available next summer.

Article source: https://www.nytimes.com/2018/10/26/your-money/new-credit-score-fico.html?partner=rss&emc=rss