So you know your FICO credit score number? That's great, but brace yourself. The company that brought you the FICO credit system, Fair Isaac Corp., have developed a new credit scoring system that shows a more complete snapshot of your financial history.
It's due to be released any day.
Here's the least you need to know about the Ultra-FICO credit score:
- It will include all of the borrowing activity that the FICO score looks at now.
- Ultra-FICO looks at your checking/savings/money market account balances. This will give lenders a look at your banking habits. While there are no hard guidelines, Fair Isaac Corp. recommends that consumer maintain a balance of over $400 for three consecutive months in each account.
- It also looks at recurring payments that you make for things like utilities, rent, etc. If you don't pay these bills through your checking or savings accounts, you will want to start. This shows a level of fiscal responsibility. Paying those bills with credit cards doesn't show the same level of responsibility.
Along with your borrowing and repayment history, this will also show potential lenders what your level of personal responsibility is. For example, if you always pay your loan payments, but not your electric bill, you can hide that under the current FICO system. The Ultra-FICO score will show a more complete picture of your financial activity.
How will the new Ultra-FICO score help or hurt?
If you have a negative credit history or no credit history, your responsible banking activity will help to improve your credit score.
Of course, the opposite is true as well.
Most lenders won't rely on the Ultra-FICO immediately. They will use the FICO score to double check what the Ultra-FICO means to them. Nonetheless, it will likely be the credit score of the future, so planning ahead will save a lot of pain and hassle.