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KEEPING SCORE

The gold standard for consumer lending, used by 90% of all lenders in America, is testing a new way to calculate YOUR credit score.

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What is a Credit Score?

Widely used FICO gives consumers a “credit score” so lenders know how risky it is to loan money (i.e. credit card, car loan or mortgage).

  • Based mostly on consumers’ payment histories.
  • 300-850 range (higher # better.)
  • Couple of points make a big difference: 740 is “excellent,” 680 is “subprime.”
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New UltraFICO Score?

  • Beginning next year, FICO plans to roll out *new* scoring option.
  • Consumers can choose to share checking or savings account data.
  • Avg. account balance, savings & overdraw history may boost scores for those with bad, little credit history.
  • BUT it is possible sharing this data could *worsen* your score.
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Timing Matters

UltraFICO Score *may* open up credit lines to millions even though consumer loan (credit, car, mortgage) balances reach record highs:

“Just because somebody will lend you money doesn’t mean you should take it.”

Matt Schulz, Compare Cards.
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Something to Consider

FICO has tweaked its credit score formula several times since it began in 1989, but it takes time for lenders to adopt the new scoring system.

More than half of Americans (58%) with FICO scores have “good credit” with scores above 700 – a record high.

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About 79M Americans have subprime credit scores, another 53M don't have enough data to generate a FICO score. Big Question: Does the rating system need fixing or has it protected lenders/consumers to help prevent another credit crisis?

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