UltraFICO Score – The New Credit Score And What You Need To Know

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[The following is a partial transcript of this episode of The Scott Alan Turner Show. Listen to the full episode to hear this story, listener questions, money hacks, and inspiring stories of people that are changing their financial lives. Subscribe to the free podcast on iTunes or Google Play]

The new UltraFICO Score can help you improve your credit score when you become a good a saver, or if you are a good saver already.

There are over 15 million people who do not have a FICO Score, because they do not have a credit history. The include people who are:

  • immigrants to the United States
  • self-employed
  • have gone through a bankruptcy and want a second chance
  • college graduates who haven’t built a credit history
  • divorced spouses who never built a credit history of their own

The credit reporting agencies and lenders will start rolling out access to what’s called your UltraFICO Score.

Having the new UltraFICO score will let you enjoy the same benefits those of us who have a good FICO credit score:

  • savings on car and home insurance
  • proving your a good risk to rent or lease an apartment
  • getting the best rates on mortgages because you’ll have more lenders to pick from
  • passing background checks for those jobs that require a good credit score

Big changes are coming to your credit score!

If you have a low credit score from FICO, how good of a saver you have become or will become may be used for a new

Consumers with a low FICO could get a higher UltraFICO, a new score that factors in bank-account activity as well as loan payments

With the introduction of the UltraFICO Score, if you are someone who doesn’t have a credit history because you’ve never had any debt or are someone who quit using credit cards to stay out of debt – you will now have the option to have a credit score.

This is huge!

Lenders will be able to ‘score the unscorable’ who don’t have credit cards, and determine how much you could borrow for a house, or a car loan. I don’t like car loans, but if you choose to get one you should get the best terms for the loan, right?

The new scoring system will also help people who have bad credit improve their score because it looks at how you save and what your income is.

Did I mention this is huge?

You will no longer have to have a credit card to build credit with the new UltraFICO score.

The people who have bad credit / no credit score are going to be able to get better mortgage rates and get approved for a house.

You need a loan to get a house. Everyone knows that nobody saves up $200,000 for their first house. Or even $100,000.

You will get a mortgage to buy a house, so the better your credit score the better your mortgage rate will be.

How the new UltraFICO Score works

UltraFICO scores use information from your bank accounts such as:

  • how long the bank account has been open
  • how often you access your bank account
  • your saving habits
  • if you have positive account balances
  • if you regularly pay bills

Your banking and saving information is used to help determine the new UltraFICO score. You can link your bank information to your UltraFICO Score:

  • bank accounts
  • checking accounts
  • money market accounts

Your balances and activity are used to determine what your new score is. For example if you maintain good account balances over time or your savings increase, they can indicate better behavior. Lenders can use this additional information when determining if they will loan you money and the terms of the loan.

According to the new UltraFICO score 7 out of 10 consumers that had savings balances of $400 or more and no negative balances over the past three months saw a higher score compared to their regular FICO score.

You Don’t Need To Have Debt To Get An UltraFICO Score

The crazy thing about getting a credit score over the past thirty years was you had to borrow money and pay it back to prove that you could borrow money and pay it back.

A millionaire earning $100,000 a year but who never used credit cards or have any debts and a person with zero savings, $200,000 in student loans, and $30,000 in credit card debt would have been seen the same in the eyes of lenders.

Now all the talk goes away about taking out a credit card after you graduate high school, charging $30 a month on it in gas and paying it off just to build a credit score.

Thirty years of personal finance books just became out dated.

All that talk about taking out debt and borrowing money to get a credit score will go away. Thank you!

Good Riddance To Credit Repair Companies

You know if you listen to my show the best way to repair your credit is to:

  1. Pay your bills on time
  2. Keep your credit utilization low
  3. Have a long credit history

You can do all those things on your own. But there a lot of people that take advantage of others with credit repair scams. It’s going to be very hard with the new UltraFICO score for these credit repair scam companies to manipulate the system.

It’s a good thing if these companies go the way of the dinosaur it would be good for everyone (except them).

Good Riddance to Bad Information About Credit Scores

Entire industries have been built around the money myth of ‘you don’t need a credit score’ and ‘a credit score is an I love debt score’.

It’s true, you don’t need a credit score. You don’t need to eat food either, but see how long that works out for you.

Now you can build a credit score easily with just a bank account, and never taking out credit cards. Your options on the choice of lenders for a mortgage just increased by 95% if you didn’t have a credit score or had a low credit score before.

What If You Don’t Have A Checking Or Savings Account?

You have to opt-in to UltraFICO. It’s not automatic. If you don’t want to use the new score, you either:

  • continue to use the old FICO score
  • have no credit score

Because you have to connect your accounts to have your banking information apply to your score. If you don’t sign up and connect your accounts, nothing changes.

Water Cooler Conversation

Keep spread the word about The Scott Alan Turner Show, where you hear the latest personal finance tips. Tell your high school kids about this now if you have them, grandparents to your kids. This credit score change is happening and it’s going to hopefully keep a lot of people from signing up for credit cards and getting buried in credit card debt.

Action Item

As of right now UltraFICO is only available through a small number of lenders but you can sign up to be notified when the UltraFICO score becomes available.

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