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FICO Releases Its UltraFICO Score: What You Need to Know

Editorial Note: The editorial content on this page is not provided or commissioned by any financial institution. Any opinions, analyses, reviews, statements or recommendations expressed in this article are those of the author’s alone, and may not have been reviewed, approved or otherwise endorsed by any of these entities prior to publication.

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When you need to borrow money, a lender will consider your credit score when determining how likely you are to repay a debt.

FICO® Scores, from Fair Isaac Corp., are the credit scoring models most commonly used by top lenders. In October 2018, FICO announced a partnership with credit reporting bureau Experian and financial data aggregator Finicity to release the new UltraFICO™ Score.

If you’re wondering how and when UltraFICO could affect your credit score, here’s what you need to know.

What is the UltraFICO Score?

The biggest change with UltraFICO is that it looks beyond borrowing behavior to consider bank account transactions to help generate a credit score.

“It’s not a traditional credit score because traditional credit scores are based on your credit report, which actually doesn’t include deposit account information and includes only information about credit accounts,” said Chi Chi Wu, a staff attorney for the National Consumer Law Center, a nonprofit focused on consumer advocacy.

The UltraFICO Score is also unique in that consumers must opt in to link deposit accounts to their credit profiles, Wu said. Only then can FICO and its UltraFICO partners access and collect bank account transaction data and include it in the scoring process.

How will UltraFICO work?

From initial reports, it appears that the UltraFICO Score will primarily be offered as a second-chance score. For example, “One use case is that a lender would invite a consumer who is in the process of applying for credit to participate in the UltraFICO scoring process,” said David Shellenberger, senior director of scores and predictive analytics at FICO.

A borrower who opts into sharing bank account data might then be able to get an UltraFICO Score that’s higher than a traditional score. That is, they might see a boost in their score if the transactions on their reported accounts demonstrate responsible, low-risk financial behavior.

“The score follows the same framework as the traditional FICO Score and is designed to be scaled the same,” Shellenberger said. This means consumers can use the UltraFICO Score as a stand-in for other credit scores.

Here’s an overview of how different FICO Scores are typically classified by lenders:

Excellent credit scores: 800 and above
Very good credit scores: 740-799
Good credit scores: 670-739
Fair credit scores: 580-669
Poor credit scores: 579 and below

Whose scores could increase with UltraFICO?

The new UltraFICO Score could help boost the scores of millions of U.S. consumers, as well as help lenders provide applicants with a second chance to qualify for credit.

Using UltraFICO in this way “is particularly helpful for consumers that may also have very sparse or inactive credit files and can provide visibility into positive financial behavior that may not be accessible via the traditional credit report,” Shellenberger said.

Here are specific details on who’s likely to see a higher score with the UltraFICO model:

  • Consumers with no credit history or without enough credit information on file to formulate a credit score: More than 15 million Americans who were previously unscored with FICO due to a lack of credit history would be able to get a credit score if they participated in UltraFICO reporting, FICO estimates.
  • Account holders with positive financial management in their bank accounts: 7 in 10 consumers who maintain an average savings balance of at least $400 without overdrawing over three months would have an UltraFICO Score higher than their FICO Score.
  • Consumers who have negative marks on their credit history due to a temporary financial hardship or mistake: UltraFICO could point to strong signs of financial recovery and help boost consumers’ scores.
  • People who have “fair” FICO Scores or whose scores are near or just below a lender’s minimum requirements: The new scoring model could provide additional information that could push their score high enough to access new borrowing opportunities and lower rates.

When will the UltraFICO Score be available?

You might not be able to take advantage of this new credit scoring option for several months. A pilot version of the UltraFICO Score will be out in early 2019, before it’s more widely released in mid-2019.

Not all lenders will use the new UltraFICO Score to assess credit applications. FICO has several different scores for different types of lenders and purposes, and some are more popular than others.

The FICO Score 9 that was developed and released a few years ago, for example, adjusted how medical debt, paid-off collections and rental history are considered in calculating a score. As a result, many consumers scored higher under FICO 9 — but it has yet to be adopted as widely as the more popular FICO Score 8.

Still, creditors and lenders interested in serving consumers that barely miss credit requirements might take a look at adding UltraFICO to their application processes. “I would encourage lenders to consider this because it expands their potential customer base,” Wu said.

Consumers interested in the UltraFICO model will likely have to wait until mid-2019 before they might see it in action.

How to build your UltraFICO Score

The UltraFICO Score works to identify whether a consumer’s bank account transactions demonstrate that they are “positively managing their financial affairs,” Shellenberger said.

Similar to how a traditional credit score factors in different elements of a consumer’s credit account history, the UltraFICO will weigh bank account histories and score a consumer on favorable or risky behavior.

If you understand what UltraFICO looks at, you can start managing your checking, savings and money market accounts to set your score up for a boost.

Here’s what you can do with your bank account to help build your UltraFICO Score:

Maintain long-standing bank accounts

“We see that consumers that demonstrate relatively longer relationships with their checking and savings account providers are less likely to go delinquent or default on a credit obligation,” Shellenberger said.

Use your bank accounts often

“Consumers that have more frequent transactions versus those that rarely use their checking or savings accounts are better credit risks,” he added. Simply put, you want to make sure you have money moving into or out of your accounts on a consistent basis.

Avoid overdrawing your account or bouncing checks

Consumers who keep their account balances in the positive will be scored better by UltraFICO, but that’s not always easy.

“Frankly, there are banks that set tripwires for consumers to trigger overdrafts,” Wu said, pointing to “reordering transactions and being aggressive in getting consumers to opt into debit card overdraft protection.”

The best way to protect yourself from account overdrafts is opting out of overdraft protection and closely tracking account balances, deposits and withdrawals.

Develop a strong savings habit

“As we look at the ratio of money coming into [demand deposits] accounts versus going out, if we see a bit more coming in than going out (indicative of saving), this is correlated with better credit risk,” Shellenberger said.

Get a budget in place that helps you live within your means and spend less than you earn each month. Try to widen the gap between income and spending, too, so you’re saving more each month.

Should you be concerned with your UltraFICO Score?

The UltraFICO Score could be a step toward opening up credit opportunities for millions of Americans who can’t qualify with previous scores.

But consumers should consider whether they are likely to benefit from the UltraFICO Score before agreeing to share their bank account data.

Some people’s UltraFICO Scores could be lower than what they’d score with other models. This might be the case if you have spotty financial behaviors and an unfavorable bank account history. And if you already have an excellent credit score, Wu said, you’re not likely to benefit from the UltraFICO Score.

You should also consider your level of comfort with sharing your financial account information. The UltraFICO is a positive use of such data, Wu said, but other potential applications could be worrying, such as debt collectors accessing this data. And last year’s Equifax data breach proves that consumers should be concerned with how credit reporting agencies collect, store and use personal data.

“Consumers participating in this process have greater control and transparency over the financial information that is being shared with a credit grantor,” Shellenberger clarified when asked about privacy and security concerns. “The consumer has direct access to this data and therefore knows exactly what is being shared.” Finicity, Experian and FICO have also set up extensive information security measures and protections to keep users’ data safe, he added.

The reward of getting a higher UltraFICO Score could be worth it for average-credit consumers who need to borrow money — and meet the requirements to do so. If this is you, focus on building your credit now and keep your eyes open for more new on UltraFICO.

Advertiser Disclosure: The products that appear on this site may be from companies from which MagnifyMoney receives compensation. This compensation may impact how and where products appear on this site (including, for example, the order in which they appear). MagnifyMoney does not include all financial institutions or all products offered available in the marketplace.

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When It Can Make Sense to Open a Store Card

Editorial Note: The editorial content on this page is not provided or commissioned by any financial institution. Any opinions, analyses, reviews, statements or recommendations expressed in this article are those of the author’s alone, and may not have been reviewed, approved or otherwise endorsed by any of these entities prior to publication.

“And would you like to open a [insert store] card today to receive an extra 10% off your purchase?”

We’ve all heard this upsell strategy. Store credit cards seem to be available at just about any place you exchange currency for goods — except for maybe 7-11. But before you sign up, it’s important to know how opening a store card can help, or hurt, your finances.

In this article:

What Are Store Credit Cards?

There are two types of store credit cards: store-only (closed loop) and co-branded (open-loop). The closed loop version limits your ability to use the card except with the retailer and its affiliates. The open-loop version carries a card network logo, such as Visa or Mastercard, which can be used anywhere Visa or Mastercard cards are accepted.

Some retailers offer both closed and open-loop versions of their cards, while others only offer a closed-loop card. Typically, the closed-loop cards are easier to be approved for: they often come with lower credit limits, and can be great for consumers looking to build or rebuild their credit scores.

The open-loop cards can require a higher credit score for approval, and some retailers will allow you to upgrade from a closed-loop card to an open-loop card after you’ve demonstrated good payment behavior with the closed-loop card. Or, they may require card applicants to apply first for the closed-loop card and, upon review of their credit file, approve them for the open-loop version, depending on their creditworthiness.

Pros and Cons of Store Cards

In addition to an initial discount on your first purchase, store cards can entice shoppers to return with ongoing discounts, special pricing and rewards programs. If you’re a regular shopper at that particular retailer, those discounts can help you save money, provided you pay off the balance in full when the bill is due. On the flip side, you may find yourself overspending on the card, as the temptation to just pull out the card when you don’t have the cash could be hard to resist.

Here are some pros and cons of applying for a store credit card:

Pros

Initial and ongoing discounts. If you’re purchasing a large-ticket item, getting a 10% or 20% discount can be a smart decision. And if you regularly shop at a particular retailer, taking advantage of ongoing promotions and sales will also help you save money.

Store perks. In addition to regular discounts and promotions that may come with a store card, some also throw in more perks like free shipping, invitation-only events, coupons and rewards programs.

Building credit. If you’re new to credit, getting a low-limit store card can be a great way to get started, as these cards are typically easier to qualify for. The payment activity of the card will be reported to the credit bureaus. As long as you handle the card responsibly, your good payment history will be reflected on your credit reports.

Rebuilding credit. If you’ve made financial blunders that have negatively impacted your credit score, getting back on track with a store card is an option you can try before having to resort to a secured card, which will require a deposit of several hundred dollars.

Cons

High interest rates. The average APR for new store credit offers is 24.97%,  compared to 16.91% for credit cards in general. With such high APRs, you don’t want to roll over a balance month to month on these cards or you may fall into a debt spiral, finding it ever more difficult to dig your way out of debt as interest charges pile up. Plus, any interest you pay will effectively negate any discount you got for using the card in the first place.

Low credit limits. While a retailer may increase your credit limit over time with responsible use of a store card, your initial credit line on a new store may just be a couple hundred dollars. If the amount of your purchases regularly comes close to maxing out your credit limit, your credit score will be negatively affected, as credit utilization (your balance compared to your credit limit) accounts for 30% of your credit score.

Read 6 Simple Steps to Improve Your Credit Score

Increased temptation to spend. Knowing you’ve got access to retailer credit, even though you don’t have the cash to spend, can make it too easy to rack up purchases you otherwise you couldn’t afford. And if you don’t have the funds to pay off the balance at the end of the month, you’ll be socked with sky-high interest charges.

Limited rewards redemption. Store card rewards programs typically require cardholders to use their rewards, cash back or points at that particular retailer or its affiliates only.

Deferred financing traps. If you apply for a 0% deferred financing credit card offer where you are given a fixed period of time to pay off a purchase without incurring interest charges, know that you run the risk of being hit with back interest from the time of purchase if you don’t pay off the balance during the 0% promotion time frame.

Hard inquiry. Anytime you apply for a new credit card, the lender will review your credit file to evaluate your creditworthiness. This is called a hard inquiry and will knock a few points off your credit score. The good news is that the inquiry’s impact will only last a year.

Read Minimize Rejection: Check if You’re Pre-Qualified for a Credit Card

Tips for staying out of trouble with store cards

Have a payoff plan. If you apply for and use a store card specifically to take advantage of a discount or promotion, have a plan in place for paying off the balance before interest charges accrue.

Resist overspending. Leave your store card at home unless you have a specific purchase in mind — that way you won’t succumb to impulse spending if you happen to walk in the store and have the card on hand to make unplanned purchases.

Make multiple monthly payments on high balances. To maintain low credit utilization on a low-limit card, it can be smart to make multiple payments online throughout the month. Better yet: once you make a purchase with the card, pay it off the next day online.

Cancel the card if it leads to too much temptation. While canceling a card can hurt your credit score, being buried in debt you can’t easily pay off is worse. If having a store card makes it too easy to spend beyond your means, you’re better off without it.

Bottom line

Store cards are great if you’re looking for a way to build or rebuild your credit score as they’re generally much easier to qualify for, but they can be dangerous if they tempt you to spend more than you can afford to repay. If you’re not careful, the high APRs and low credit limits that are often associated with store cards can quickly lead to trouble. But if you shop regularly at a retailer, being able to access discounts on a regular basis can help you save money, as long as you’re diligent about paying off the balance in full by the due date.

Advertiser Disclosure: The products that appear on this site may be from companies from which MagnifyMoney receives compensation. This compensation may impact how and where products appear on this site (including, for example, the order in which they appear). MagnifyMoney does not include all financial institutions or all products offered available in the marketplace.

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Julie sherrier is a writer at MagnifyMoney. You can email Julie here

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View Your Free FICO Score for all 3 Credit Bureaus

Editorial Note: The editorial content on this page is not provided or commissioned by any financial institution. Any opinions, analyses, reviews, statements or recommendations expressed in this article are those of the author’s alone, and may not have been reviewed, approved or otherwise endorsed by any of these entities prior to publication. This site may be compensated through a credit card partnership.

View Your Free FICO Score for all 3 Credit Bureaus

There are lots of free credit scores floating around, but most of them are not the true FICO® score that lenders subscribe to and use as part of their decision.

However FICO® is working to change that by allowing banks and credit unions to give you free ongoing access to the real score they use to make lending decisions as long as you are an account holder.

The easiest place for anyone to get their free FICO® score is via the Discover Credit Scorecard. You do not need to be a customer of Discover – anyone can register and get their official FICO® score for free. The data is from the Experian credit bureau.

You can also get a free Experian FICO® 8 score at freecreditscore.com. While that site used to require you to enter your credit card to get information, your FICO® score and Experian report are completely free with no credit card information needed.

To find out where to get your FICO® score from the other credit bureaus, read on.


Every bank chooses at least one of three credit bureaus to calculate a FICO® score: Equifax, Experian, and TransUnion. The FICO® score one bank uses can be different than another depending on which credit bureau they pulled a report from.

The good news is, you can now see your real, free FICO® score from all three credit bureaus depending on which banks hold your accounts. FICO® itself charges $19.95 a month for you to see those scores, though they also throw in full copies of your credit reports, which the free bank scores do not.

Here’s where to find your real, free FICO® scores from banks or credit unions anyone can join:

Equifax Scores

Citibank

  • Available with: Any Citibank branded credit card. This does not include Citibank cards with other brands like the American AAdvantage or Hilton HHonors cards.
  • Score updated: Monthly
  • Where to find it: On your online account or the Citi app
  • Learn more

DCU Credit Union

  • Available with: Any credit card, or a checking account with direct deposit
  • Score updated: Monthly
  • Where to find it: Look for an invitation in your online account
  • Learn more

Huntington Bank

  • Available with: The Huntington Voice credit card – you will get a FICO® Bankcard Score 2 from Equifax
  • Where to find it: Log into your account and you’ll see a link

PenFed

  • Available with: PenFed members with active checking accounts, installment loans, and revolving lines of credit
  • Score updated: When PenFed refreshes – no set schedule
  • Where to find it: Login to your account and click ‘Your FICO® Score is Ready’
  • Notes: PenFed uses a more advanced ‘Next Gen’ FICO® score that has a different scale than traditional FICO® scores, with 150 as the lowest score and 950 as the highest score. Most banks use a score with a scale of 300 to 850. Because of this the score you see on PenFed’s site may be higher or lower than what you see from others.
  • Learn more

State Employees Credit Union of North Carolina

  • Available to all credit card holders

Experian Scores

Capital One and American Express regularly use Experian’s FICO® among others for credit decisions.

American Express

  • Available with: Any American Express credit card
  • Score updated: Monthly
  • Where to find it: On your online account

Chase

  • Available with: Chase Slate®* accounts
  • Score updated: Monthly
  • Learn more

Discover

  • Available with: All Discover cards and if you are not a Discover cardholder, you can sign up to get your FICO® score for free by visiting creditscorecard.com.
  • Score updated: Monthly
  • Where to find it: On your statement and online

First National Bank of Omaha

  • Available with: Any credit card account
  • Score updated: Monthly
  • Where to find it: On your online account
  • Learn more

Wells Fargo

  • Available with: Any Wells Fargo credit card
  • Score updated: Monthly
  • Where to find it: On your online account
  • Learn more

Please note: a previous version of this blog post noted that USAA provides a free FICO® credit score. USAA actually provides a free VantageScore.

TransUnion Scores

Bank of America

  • Available with: Select credit card accounts
  • Score updated: Monthly, with history
  • Where to find it: Link available on your account summary page under the ‘Tools and Investing’ section

Barclays

  • Available with: Any credit card account
  • Score updated: Monthly
  • Where to find it: Link available on your account summary page

Walmart / Sam’s Club

  • Available with: Walmart Credit Card, Walmart MasterCard, or Sam’s Club Credit Card
  • Score updated: Monthly
  • Where to find it: At Walmart.com/creditlogin, only if you enroll in online delivery of monthly statements
  • Learn more

Unknown Bureau

Other, less open to the public free FICO® providers include:

  • Ally, for auto loan holders
  • Hyundai and Kia Motor Finance allow customers to view their FICO scores through their online accounts.
  • Sallie Mae offers a free, quarterly TransUnion score if you receive a new Smart Option Student.
  • Merrick Bank doesn’t have open applications for its Platinum Visa, but does offer free scores to its cardholders.
  • Some credit unions with limited membership also offer scores, so check yours to see if it provides them.

Find the Best Credit Score for Your Needs:

The credit score that you are looking for varies, depending on what type of credit you are looking to apply for. Each credit score version has different benefits, and lenders pull certain scores in accordance with your application.

Credit Score Monitoring

The best options: All VantageScores and FICO® scores

If you’re simply looking to monitor your credit score and stay on top of your credit, either VantageScore or FICO® score will suffice.

New Credit Card

The best options: FICO® Bankcard Scores or FICO® Score 8 primarily; FICO® Score 3

Where to get them: Get your FICO® Score 8 from Credit Scorecard by Discover or freecreditscore.com

When applying for a new credit card, these scores are most likely to be pulled by credit card issuers. Lenders may pull your score from one or all three bureaus.

Mortgage Loans and Mortgage ReFis

The best options: FICO® Scores 2, 4, 5

Where to get them: Myfico.com for $19.95 a month

These scores are used in the majority of mortgage-related credit evaluations, with lenders pulling your score from all three bureaus. However, these scores are not free and can only be purchased at myfico.com.

Auto Loans

The best options: FICO® Auto Scores 2, 4, 5, 8, 9

Where to get them: Myfico.com for $19.95 a month

Auto scores are industry-specific and used in the majority of auto-financing credit evaluations. Lenders may pull your score from one or all three bureaus. Unfortunately, these scores are not free and need to be purchased at Myfico.com.

Personal Loans, Student Loans, and Retail Credit

The best option: FICO® Score 8

Where to get it: Credit Scorecard by Discover or freecreditscore.com.

For other financial products such as personal loans, student loans, and retail credit, FICO® Score 8 is best. This is the credit score most widely used by lenders, and they may pull your score from one or all three bureaus when making a decision.

LendingTree
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Credit Req.

Minimum 500 FICO®

Minimum Credit Score

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months

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A Personal Loan can offer funds relatively quickly once you qualify you could have your funds within a few days to a week. A loan can be fixed for a term and rate or variable with fluctuating amount due and rate assessed, be sure to speak with your loan officer about the actual term and rate you may qualify for based on your credit history and ability to repay the loan. A personal loan can assist in paying off high-interest rate balances with one fixed term payment, so it is important that you try to obtain a fixed term and rate if your goal is to reduce your debt. Some lenders may require that you have an account with them already and for a prescribed period of time in order to qualify for better rates on their personal loan products. Lenders may charge an origination fee generally around 1% of the amount sought. Be sure to ask about all fees, costs and terms associated with each loan product. Loan amounts of $1,000 up to $50,000 are available through participating lenders; however, your state, credit history, credit score, personal financial situation, and lender underwriting criteria can impact the amount, fees, terms and rates offered. Ask your loan officer for details.

As of 28-Feb-2019, LendingTree Personal Loan consumers were seeing match rates as low as 3.99% (3.99% APR) on a $10,000 loan amount for a term of three (3) years. Rates and APRs were based on a self-identified credit score of 700 or higher, zero down payment, origination fees of $0 to $100 (depending on loan amount and term selected).

Other Scores and Their Value

FICO® Score 9 is the newest model and not widely used yet. It is also not available for free at this time. The benefits of this score are that it doesn’t penalize you for paid collections and reduces the ding you get from unpaid medical collections. See our review for more information.

The FICO® NextGen score is used to assess credit risk, but only a small number of lenders use it due to its 150-950 scoring range and older model.

*The information related to the Chase Slate® has been collected by CompareCards and has not been reviewed or provided by the issuer of this card prior to publication.

Advertiser Disclosure: The products that appear on this site may be from companies from which MagnifyMoney receives compensation. This compensation may impact how and where products appear on this site (including, for example, the order in which they appear). MagnifyMoney does not include all financial institutions or all products offered available in the marketplace.

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Nick Clements is a writer at MagnifyMoney. You can email Nick at [email protected]

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