What is UltraFICO?

FICO credit scores range from 300 to 850. With higher scores typically allowing borrowers to get lower interest rates and qualify for credit with greater ease. In the United States, the average FICO credit score is around 695. This still falls into the “good” range. Still, many people struggle to raise their score out of the poor and fair ranges. Leaving them stuck with subprime borrowing options. However, the launch of a new FICO scoring model – the UltraFICO – is giving consumers the ability to boost their credit by factoring in new financial activities.

What is UltraFICO?

Unlike a traditional FICO score that relies on information provided to the credit bureaus by lenders. The UltraFICO uses an opt in model. Consumers have the option to include data from a variety of accounts. These include checking, savings, and money market accounts.

After opting in and providing banking details, UltraFICO reviews the accounts to learn more about a consumer’s financial activities. The calculation considers not just the person’s history with lenders. It also factors in the amount in savings, the age of each bank account, and how actively the person uses their accounts.

Essentially, UltraFICO considers a consumer’s cash-handling activities. Those who keep a healthy balance in their savings account, keep their accounts open for long periods, avoid overdrafts, and regularly pay bills that aren’t factored into a traditional FICO (like utility payments and rent). These factors may be able to boost their FICO score by signing up for UltraFICO.

However, it’s important to note that UltraFICO is still in the pilot phase. Not many lenders are involved in the trial program. There is also no guarantee that the UltraFICO will become a widely accepted approach to evaluating creditworthiness in the eyes of lenders.

Consumers That Can Benefit from UltraFICO

The UltraFICO model primarily benefits two kinds of consumers. First, people with “thin” files – usually those with very little credit history – could see their scores rise by signing up for UltraFICO. By allowing daily banking activities to factor into their scores, these consumers essentially give the model access to more information that could determine their creditworthiness.

The second group that could benefit are those who are struggling with a low credit score. If a consumers activity as a borrower has some blemishes. For example, late payments or an account in collections, the UltraFICO could use the additional data to offset some of the credit score damage.

If your score is in the low 600s or lower, the UltraFICO model could be beneficial, allowing you to work your way up into the “good” range faster. However, that doesn’t mean UltraFICO will make a big difference for everyone in that category. For example, those who regularly overdraft or have less than $400 in savings on average might not see a credit score boost.

Consumers That Won’t Benefit Much from UltraFICO

Along with consumers who don’t have a great banking history, people who already have good to excellent credit may not benefit much from the UltraFICO model. Usually, getting access to credit isn’t much of a challenge in these categories.

Plus, these borrowers usually qualify for competitive interest rates already. While those with excellent credit do the best when it comes to financing terms, the UltraFICO model might not cause a substantial credit score increase for those who already have scores above 670. As a result, borrowers in the good to excellent score ranges might not experience much of a benefit.

The only exception may be consumers who have scores that are just under the number for getting into a higher category. For example, if you have a credit score of 735, which is on the high end of the “good” category,” the UltraFICO scoring model might get you above 740, putting you into the “very good” category instead.

The Drawback of Signing Up for UltraFICO

While the ability to boost your FICO score using the UltraFICO model is enticing, there is one drawback to consider. In order to include bank account activity in your score, you have to give the program access to a substantial amount of personal data.

Along with connecting the bank accounts to the program, which requires entering your username and password, you also hand over transaction records. Many people classify these kinds of details as sensitive, and you have to trust the data is protected adequately.

Ultimately, the UltraFICO has the potential to help borrowers with limited credit histories or poor to fair credit. Just make sure you are comfortable with handing over your banking data before you choose to sign up.

Do you participate in UltraFICO? Did you find it beneficial? Share your thoughts in the comments below.

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Tamila McDonald

Tamila McDonald is the Chief Operations Officer at District Media, Inc. A U.S. Army veteran with 20 years of distinguished service—including five years as a military financial advisor. Tamila is a former AFCPE-certified personal financial counselor who spent eight years post-retirement guiding wounded warriors and families on budgeting, VA benefits, and long-term planning, bringing more than 15 years of specialized writing and content leadership in personal finance and HR topics to ensure District Media delivers trustworthy, experience-backed guidance.