Introducing UltraFICO: FICO Plans Big Shift in Credit-Score Calculations

[Anonymous]

Interesting article just published today in the Wall Street Journal:

FICO Plans Big Shift in Credit-Score Calculations, Potentially Boosting Millions of Borrowers

"Credit scores for decades have been based mostly on borrowers’ payment histories. That is about to change.

Fair Issac Corp., creator of the widely used FICO credit score, plans to roll out a new scoring system in early 2019 that factors in how consumers manage the cash in their checking, savings and money-market accounts. It is among the biggest shifts ever for credit-reporting and the FICO scoring system, the bedrock of most consumer-lending decisions in the U.S. since the 1990s.

The UltraFICO Score, as it’s called, isn’t meant to weed out applicants. Rather, it is designed to boost the number of approvals for credit cards, personal loans and other debt by taking into account a borrower’s history of cash transactions, which could indicate how likely they are to repay.

The new score, in the works for years, is FICO’s latest answer to lenders who have been clamoring for a way to boost loan approvals."

[Anonymous]

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@Anonymous wrote:

Interesting article just published today in the Wall Street Journal:

FICO Plans Big Shift in Credit-Score Calculations, Potentially Boosting Millions of Borrowers

"Credit scores for decades have been based mostly on borrowers’ payment histories. That is about to change.

Fair Issac Corp., creator of the widely used FICO credit score, plans to roll out a new scoring system in early 2019 that factors in how consumers manage the cash in their checking, savings and money-market accounts. It is among the biggest shifts ever for credit-reporting and the FICO scoring system, the bedrock of most consumer-lending decisions in the U.S. since the 1990s.

The UltraFICO Score, as it’s called, isn’t meant to weed out applicants. Rather, it is designed to boost the number of approvals for credit cards, personal loans and other debt by taking into account a borrower’s history of cash transactions, which could indicate how likely they are to repay.

The new score, in the works for years, is FICO’s latest answer to lenders who have been clamoring for a way to boost loan approvals."

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If this actually going to be implemented in US then it would raise serious privacy concerns.  For those who bank years with the same bank would have a much higher credit score. Banks would had to report to credit bureaus the length of bank account(savings/checkings). FICO may have stated this is an option however we all know that creditors and lenders would someday make it mandatory with lending decisions on rather you get approved or not. 

[Streetervillelady]

 MaizeandBlue, Interesting reading.  Thank you for the link.

[DaveInAZ]

Yes, just saw that in my Google News feed. I usually don't click feeds from the WSJ as they're almost always behind a paywall, but that article isn't.

The question that immediately came to my mind is how FICO would get that information on "how consumers manage the cash in their checking, savings and money-market accounts". EWS, Early Warning System, could give them that info because when I pulled my EWS report a few months ago I was surprised - and very annoyed - that member banks like Chase & BoA report your monthly account balance. But my reaction to that was to close my Chase account, I think reporting my bank account balance is an invasion of privacy. My Chex Systems report doesn't have an details on bank account balance, only inquiries when opening a new account plus any negative info.

I'm not sure FICO could get all the banks, credit unions and other financial institutions to report bank account balances to them. And I don't think it should be legal for them to report that. Reporting debt obligations is fair & reasonable, but what I have in my checking and savings accounts should be between me and that financial institution.

[bourgogne]

yeah saw this in my inbox but have not read it.  what is the take-away from it, are banks now going to supply the 3bs with balance info, cash flow or worse or is employment going to play into it? personally I am fine with good old history and account age but wow is it ever different in other parts of the world.  I had a few friends move to paris and my god I cannot believe the hoops they had/have to jump through to get real estate.  one of my friends said they only use debits - can you imagine a world with no subs?  my god

https://www.businessinsider.com/credit-score-around-the-world-2018-8#6-brazil-6

[Anonymous]

The article was just published about 3 hours ago so it will be available for a few more hours before they put it behind the paywall

The banking information already exists; its just that the major 3 credit bureaus don't collect it.  But there are lots of other consumer reporting agencies that already capture that information and no doubt sell it to lenders.  This move it not that very different from say Early Warnng Systems or Chex Systems so it looks like Fair Issac is trying to create a competitive advantage.

[bourgogne]

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@DaveInAZ wrote:

Yes, just saw that in my Google News feed. I usually don't click feeds from the WSJ as they're almost always behind a paywall, but that article isn't.

The question that immediately came to my mind is how FICO would get that information on "how consumers manage the cash in their checking, savings and money-market accounts". EWS, Early Warning System, could give them that info because when I pulled my EWS report a few months ago I was surprised - and very annoyed - that member banks like Chase & BoA report your monthly account balance. But my reaction to that was to close my Chase account, I think reporting my bank account balance is an invasion of privacy. My Chex Systems report doesn't have an details on bank account balance, only inquiries when opening a new account plus any negative info.

I'm not sure FICO could get all the banks, credit unions and other financial institutions to report bank account balances to them. And I don't think it should be legal for them to report that. Reporting debt obligations is fair & reasonable, but what I have in my checking and savings accounts should be between me and that financial institution.

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annoyed...you read my mind..re the EWS, do business checking accounts show up on this or only consumer?  thank you

[Jnbmom]

This is rather disturbing😕

I don't think it is any of their darn business what we have in our banking accounts and should not be relevant in scoring.

Its one thing if you are applying for a loan or requesting a huge CLI, your income needs to be in the equation, however as far as "FICO" scoring it shouldn't be used or acessible to them to generate a score.

And how would they factor that in, would jo blow down the street who makes a modest income yet maintains his credit impeccable be in a lower tier than John doe who make substaionally more would therefore  get a bigger boost?

[blindambition]

I agree that my savings and checking account balances are none of their business. The only thing that matters is me being able to pay a new account.
This scoring method would clearly discriminate against disabled consumers. Most would never have hundreds in checking, savings, money market accounts.

[DaveInAZ]

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@bourgogne wrote:

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annoyed...you read my mind..re the EWS, do business checking accounts show up on this or only consumer?  thank you

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I don't have any business accounts so I don't know, but my guess is: Yes.

EWS also reported my cell phone # that I give to banks for contact info so they can text me, plus my unique email address I only use for banking. My primary email from my ISP got on spammers list a few years ago and I was getting 30-50 spams a day so I had to shut it down and I'm now very protective of my email addresses and use different ones for banking, online shopping, family & friends, etc.

There's a form on their website that you can use to request your report free once per year, earlywarning.com