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UltraFICO Score: How New Factors Benefit Borrowers

November 20, 2018 Raymond Bartreau

Nearly 40 years since its inception, the FICO Score is getting a makeover. With the introduction of UltraFICO, borrowers could see increased scores and potentially capitalize on additional borrower eligibilities.

What Is the UltraFICO Score?

FICO’s parent company, Fair Isaac Corporation, recently announced a new model called the UltraFICO Score.

UltraFICO Score

The FICO Score, measured on a scale of 350 to 850, has been used by the majority of lenders since the 1980s to evaluate the credit-worthiness and eligibility of prospective borrowers. Individual FICO Scores are determined based on rating a borrower’s payment history, available credit, revolving debt, new credit requests and length of credit history.  

The UltraFICO Score, unlike the traditional FICO Score, will take into consideration account data, voluntarily provided by consumers, that reflects responsible financial management habits. With this data, the UltraFICO Score can reflect banking behaviors such as checking, savings and money market account activity (including on PayPal and Venmo), to better determine credit-worthiness for all types of loans from mortgages to auto. As a result, the UltraFICO Score should broaden the number of eligible borrowers.

Launching next year, the UltraFICO Score will be distributed by only one of the three major reporting agencies: Experian.

Which Consumers Are Projected to Benefit the Most from the New Score?

Credit experts say the UltraFICO score should improve access to credit for people with so-called “thin files.” These are the individuals who have little, if any, traditional credit history, including millennials, foreign-born residents and other credit-invisible individuals.

More specifically, the UltraFICO Score is designed to help borrowers with FICO Scores that fall in the range of 550 to 650, which is the typical lender cutoff because it is just below what is considered “good credit.” FICO anticipates consumers with balances of greater than $400, no recent negative balances and new or minimal credit history could see score increases using the UltraFICO Score. Some individuals may see their scores increase 20 points or more once their banking data is analyzed.

During the height of the economic recession and housing crisis in 2008, the average credit score fell to 686. Since then, many scores have shown signs of recovery nationwide, but there are still segments of consumers struggling. In September, FICO reported the average score hit an all-time high of 704.

UltraFICO Scores can be applied to all types of loans, and “would most likely be used as a second chance,” said Sally Taylor-Shoff, Scores Vice President at FICO. According to Nerd Wallet, the UltraFICO will not be offered to individuals who already have excellent credit scores.

When Will the UltraFICO Score Be Available?

FICO is piloting the UltraFICO Score in early 2019 with “a handful of lenders,” according to FICO Senior Director of Scores and Predictive Analytics David Shellenberger. The broader launch is anticipated for summer 2019.

What Is the Difference Between UltraFICO and FICO Score XD?

Launched in 2016 for credit card applicants with thin files, the FICO Score XD relies on utility, cable and phone bills for payment history. Unlike the UltraFICO, the FICO XD does not require deposit account data to score borrowers. Likewise, the UltraFICO Score will not evaluate utility payment history.

What Does the Launch of UltraFICO Mean for Loan Officers?

Launch of UltraFICO Mean for Loan Officers

With the 2018 housing market overshadowed by low inventory and rising interest rates, the UltraFICO Score unveils an upcoming opportunity to retarget clients previously denied or rejected due to low credit. As early as summer 2019, prospective purchasers and refinancers could capitalize on the availability of the UltraFICO to boost their credit scores and their ability to borrow.

Across all consumer finance industries, loan originators should prepare for the UltraFico launch by mining their CRMs to determine which segments of their contacts have the highest propensity for increased credit scores through the analysis of banking behavioral data. In late 2019, originators will be able to stretch marketing strategies to these segments, educating consumers on the benefits of the UltraFICO and expressing the newly available borrowing potential.

Reimagining Your Consumer Finance Marketing Win?

Contact Best Rate Referrals today.


About the Author

Raymond Bartreau

Raymond Bartreau is the Senior Vice President of Lending Partnerships at Digital Media Solutions, LLC (DMS), an industry leader in the world of customer acquisition and retention that helps clients maximize their digital marketing to beat the competition and accelerate growth. In this role, Raymond heads DMS subsidiary Best Rate Referrals, an award-winning consumer finance marketing firm with NMLS operating licenses in most states. In 2018, Best Rate Referrals expanded into the world of personal finance with the launch of Loan Advisor, a new online marketplace designed to provide consumers with simple and fast personal loan quotes from lenders for free. A leader with more than a decade of combined financial services and direct marketing experience, Raymond Bartreau has spent his career providing lenders with the strategies and insights to better connect with consumers amid an ever changing, rate-driven market. An impressive list of accolades speaks to Ray’s steady stream of success. He was a 2017 recipient of the HousingWire Insiders Award, made the National Mortgage Professional magazine list of the top 40 under 40 and became a Mortgage Professional Association “Hot 100” on two separate occasions. An experienced speaker, Ray has shared his insight at a number of national conferences, including HousingWire’s Engage.Marketing Summit and the Power Originator Summit. As Senior Vice President of Lending Partnerships at DMS, Raymond oversees operations for DMS Consumer Finance, comprised of award-winning consumer finance marketing companies including Best Rate Referrals, Better Loan Choice and Got Consumer.

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