Your FICO score is about to be reevaluated with a new system that will give Americans a chance to prove themselves to lenders, but is it more harmful than helpful? Get the details and decide inside...
Starting in 2019, your credit score may get a boost. The reason? Cash is now part of the equation.
A new pilot program called UltraFICO may enhance your credit score by incorporating data from your savings and checking accounts. The new program will allow Americans who "have very little credit" prove themselves to lenders, despite not having a history of making on-time payments on a car loan, mortgage or credit card.
NBC News reports:
FICO parent company Fair Isaac Corporation announced Monday a new model called the UltraFICO Score, which will augment traditional metrics of credit risk with voluntarily offered information from bank statements, like evidence of saving and on-time payment transactions. When it debuts in a pilot program next year, credit experts say the UltraFICO score will improve access to credit for people with so-called “thin files” who have little, if any, traditional credit history.
The new system will allow lenders to make more informed lending decisions when evaluating the credit risk of a prospective customer, which would allow the lender to do a better job at matching the right credit offer to a potential customer.
FICO plans a big shift in credit-score calculations, potentially boosting millions of borrowers pic.twitter.com/YejozGpvui
— The Wall Street Journal (@WSJ) October 27, 2018
Sounds good right? Some of y'all are already making purchases in your head with this new information. However, it may not be as good as it sounds.
While boosting credit scores to make it easier to qualify for loans may seem like a good idea, it's actually horrible for the economy. This is how recessions happened in the past. People were getting approved for home loans they shouldn't have been, then they defaulted and were then thrust into a mortgage crisis which sparked/added to a recession.
So, think about it. This new FICO evaluation could only benefit lending companies and corporations, likely friends of Trump. Just sayin'. You have to weigh all your options here.
So, do you think UltraFICO is the new financial wave or will it end up causing more unnecessary issues when it comes to borrowing money? Let us know your thoughts in the comments.
Photo: Getty
