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The traditional FICO, Fair Isaac Corporation, method for obtaining a credit score relies on your personal relationship with credit. How much credit you have outstanding, how often have you been late on your payments, the length of your credit history, your personal bankruptcies, are some of the activities that affect your credit score. If you never had credit or haven’t manage your credit well in the past, the traditional FICO will place you on a high risk category. This generally means denied future credit or high interest rates for you.
According to the analysts, the new Ultra-Fico will allow millions of Americans to obtain credit. The credit score up until now, has been based mostly on payment history. However, this new and secondary method, the Ultra FICO, will use the payments and the management of your bank accounts in the calculations.
Theoretically, a person who has stopped paying his debts can still show good management of his non credit accounts. These accounts include; checking, savings and money funds at the banks.
Obtain your traditional credit score and credit monitoring from Transunion.
Credit cards companies, auto dealers and lenders in general, have been asking for new alternatives to approve loans and credit for their clients. The Ultra-FICO is an attempt to design a credit score formula to help more consumers qualify for credit. Additionally, the credit bureaus, Equifax, Transunion and Experian are also deleting some negative entries from credit reports. Examples of these entries include; judgments, tax liens.
How to benefit by using the Ultra FICO method of credit score in 2019
The Ultra FICO method is an opt in or second opportunity for people who can’t receive credit base on the traditional FICO credit score. These consumers have the option of asking for the new method and to decide which bank accounts should be used in the calculation of their individual FICO. Therefore, the best way to benefit is by including the best managed bank accounts. These accounts are the ones with positive balances (best if high balance), with no overdrafts and paid timely.
Should you opt for the Ultra-FICO? It depends on how important receiving a good credit score is to you. Is it absolutely necessary for you to disclose your bank accounts and other non credit accounts in order to show that you are trustworthy? I recommend that you opt into the new method if and only if you think it is important to you.
These are the habits to cultivate, regardless of which method for credit score you opt for:
- Don’t ask for credit with frequency
- Don’t use all your approved credit
- Pay each one of your bills on time
The traditional FICO score will continue to be the standard for calculating your credit score. The Ultra-FICO is a secondary method to help you obtain a better score, not obtained with the traditional one. It is an opt in method that can help those with bad credit and those who never had credit. These changes will take effect in year 2019.