UltraFICO: Will It Make It Easier to Get A Mortgage?

Dated: 11/02/2018

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Vector of A Visa Credit Card

If you’re one of the millions of Americans that have no credit history or have a FICO score that falls below a 600, it might soon be easier for you to qualify for a loan. UltraFICO will become a new type of credit scoring that will allow consumers to establish credit by means of banking and savings activity, rather than have to rely on credit cards and other forms of debt.  

Its projected that this new scoring system will most benefit the 7 million consumers who fall within a FICO range of 500-600, which is typically just below the minimum credit requirement for most lenders. Also benefiting will be the 15 million consumers who have no credit history as a result of never having taken out a loan or applying for a credit card. 

Ultimately, this program aims at giving consumers a wider range of financial options, not by supplanting traditional credit scores, but rather by supplementing positive data to help adjust their current scores. 

How Exactly Will UltraFICO Work? 

Traditionally, FICO scores take into consideration factors such as how long you’ve had the account, total credit balances, and repayment history. As such, your score was entirely dependent on previous debt. With UltraFICO, consideration is given to indicators that reflect credit worthy behavior. These include: (1) consistent savings; (2) steady bank balances; (3) avoiding overdrafts; and (4) paying bills on time.

As mentioned earlier, the UltraFICO can complement your basic FICO score. During testing, the new scoring system improved the scores of seven out of ten consumers, who saved 400 dollars and had no negative balances over the last 3 months. In fact, four out of ten consumers saw an improvement of 20 points or more. 

Ultimately, the UltraFICO will be an optional feature, which will not be offered to everyone. Consumers will have the ability to opt in and will only be given the choice if they are unable to qualify with traditional scoring systems. By opting in, consumers will allow lenders to access their banking and savings information, so that they can better assess their overall financial responsibility. 

Is UltraFICO Right for You? 

The ideal candidate for this system will be anyone who is within the range of 500 and 600 traditional FICO score, as well as anyone who has no credit score at all. Generationally speaking, Millennials might be the greatest beneficiaries of this system given that many have not had enough time to build credit.

UltraFICO scoring will be piloted by a select group of lenders early next year will likely become available for wider use by the summer. 

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John Garibyan

I have dedicated myself to the real estate industry for the past 11 years. I pride myself in the patience and honesty i provide to my clients. Finding a home can be very stressful and time consuming a....

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