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According to the Wall Street Journal, FICO is planning to release a new scoring model, the “UltraFICO.”
The UltraFICO score will factor in things like your checking balance, checking transaction history, and overdraft history. Whereas your FICO score is only based on your credit history including factors like payment history, new credit inquiries, debt, and length of credit history.
With this change, you’ll still have a traditional FICO score, but you’ll also have a second UltraFICO score. And for a lot of folks, their UltraFICO score should be higher, which could help you get approved for more of the great travel rewards cards out there. 😉
For millions of people, this means there’s likely to be an increase in your score when comparing your old FICO score to your UltraFICO score. Because most folks have a long checking history even if they don’t have a long credit history. However, banks won’t be required to use your UltraFICO score when approving you for loans or credit.
That said, changes like this could also lead to more issues for creditors because it could lead to more people having inflated credit scores. If creditors start lending to those who can’t handle credit responsibly it could cause an increase in payment defaults and possibly more restrictions in the future.
What’s your take on this news? Do you think it will have a positive effect on consumers as a whole? Share your thoughts in the comments!
Hat Tip: Wall Street Journal