Historically, your credit scores were solely dependent on the information reported directly from your previous and current lenders. Fortunately, two new credit services, UltraFICO, and Experian Boost, are changing the former standard of reporting by providing consumers options that were not previously available.
How UltraFICO Works
Towards the end of 2018, FICO, Finicity, and Experian announced UltraFICO to be their new credit scoring system in a joint press release. UltraFICO was created so you now have the ability to choose whether or not your bank deposit account information is reflected in your credit score. FICO says they did this to help those consumers who manage their deposit accounts in a responsible way.
Essentially, if you are a consumer who does not bounce checks or receive multiple overdraft fees, then your credit score would be higher. On the other hand, if you bank irresponsibly, then your score will be lower.
One thing that is not commonly known is that this only impacts the newest scoring model and not all lenders use the same model. For example, most mortgage lenders use an older version, and this will not impact those models in the same way. So if you are needing to boost or improve your score to help qualify for a mortgage, proceed with caution!
This kind of system has never been seen before. Your credit score can now be directly affected by information not included in your actual credit report. This is much different from how the system has been operating. The choice to include this outside information is still optional, though. You would have to give Experian or FICO permission to access your deposit data if you wanted to take advantage of this new service, otherwise, your data will be left private. It is important to keep in mind that, while this gives you as the consumer more control over what is impacting your credit score, it also gives the credit reporting agency more of your information.
How Experian Boost Works
Boost followed in UltraFICO’s footsteps and created its own new credit service. Now, if you were to grant Experian the right to look through your online banking, like utility and phone payment data, then they would add it to your Experian credit report. This would then make it possible for FICO and VantageScore to consider this information when creating your actual credit score.
For the first time, you will now be able to add your own data and information to your credit report, whereas in previous years, all the data was added by other sources. So, if you did not have a credit card and were not building credit traditionally, you would now be able to add some scorable information to your credit report and therefore impact your score in a favorable way.
Side by Side Comparison
These two new credit scores are similar in many ways, but they do differ in some specific areas. This chart should help clear those differences up and make it easier to understand how UltraFICO and Experian Boost work in respect to each other.
HOW A CREDIT BUREAU CAN IMPACT
UltraFICO
Experian Boost
Only Influences Experian-Based Scores
YES
YES
Requires Consumer Permission
YES
YES
Uses Funicity to Access Bank Account Information
YES
YES
Considers Historical Balances and Bank Account History Itself
YES
NO
Specifically Considers Utility and Phone Bill Payment Information
NO
YES
Adds Information to Experian Credit REport Directly
NO
YES
Works With FICO 8 and 9 at Experian
YES
YES
While you do have to be willing to give out your banking information, including usernames and passwords, these two new systems are here to change the way credit is reported. UltraFICO and Experian Boost aim to give consumers more power over how their credit is scored, which is an innovation never seen before. This seems to be what the industry is moving towards, so if you like the sound of that, then great! But if not, you still need to prepare yourself because it is coming!
